Swimtech Pools Inc. (SPI) reported the following in its financial statements for the quarter ended March 31, 2018.

During the quarter ended March 31, SPI reported Net Income of $5,000 and declared and paid cash dividends totaling $5,000.

Required:

1. Calculate earnings per share (EPS) and return on equity (ROE) for the quarter ended March 31.

2. Assume SPI repurchases 10,000 of its common stock at a price of $2 per share on April 1, 2018. Also assume that during the quarter ended June 30, 2018, SPI reported Net Income of $5,000 and declared and paid cash dividends totaling $5,000. Calculate earnings per share (EPS) and return on equity (ROE) for the quarter ended June 30, 2018.
3. Based on your calculations in requirements 1 and 2, what can you conclude about the impact of a stock repurchase on EPS and ROE?

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December 31, 2017 March 31, 2018 $ 50,000 $ 50,000 Common Stock, $1 par, 50,000 shares outstanding Additional Paid-In Capital 30,000 30,000 Retalned Earnings 20,000 20,000 Total Stockholders' Equity $100,000 $100,000