Gassoumi plc has the following characteristics:

Net earnings: £100m Number of shares: 1,000,000 Market price per share: £1,000 Book value of equity: £1,200m EPS: £100 Book value per share: £1,200 The company decides to take advantage of a sudden stock market slump by buying back a quarter of its shares at a price of £500 per share. Its after-tax cost of debt is 5%.

Calculate EPS and book value per share. Same question if the buy-back price is £1,500 per share. What do you conclude?

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