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Should company go for dividend payment or buy back shares

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Reference no: EM132950166

earnings per share for 2020 Rs 5.00

Number of shares outstanding 40 million

Target payout ratio 50%

Planned dividend per share Rs 2.50

Stock price, year-end 2020 Rs 130

Problem 1: ABC plans to pay the entire dividend early in January 2021. Should the company go for dividend payment or buy back shares? Please give proper justification based on the change in the total value of firm to the shareholders and/or P/E ratio.

Reference no: EM132950166

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