A company is planning to pay EUR 5 million in dividend to its common shareholders this year. Enclosed the following earnings and market price information for the company:

Net income 5.500.000 Number of shares 150.000 Expected market price per share after the dividend payment: 50

Option A - repurchased shares at a price of EUR 50, evaluate the companys share price after the repurchase by calculating the EPS and estimated share price.

Option B - announce a 3 for 1 share split for its shareholders, assuming that the company chose option B, how many shares outstanding would the company have and what would be its EPS after the split?

Exercise 8.

A company has 35% of its balance sheet as debt with a total amount of assets of EUR 21,000,000. If the company's cost of equity is 7% and its cost of debt 5%, and considering the corporate tax rate of 35%, what is the company's WACC (Weighted average cost of capital)?

Exercise 9.

A company's shareholders received a dividend of 2 last year and expect dividend to grow by 6% in the future The cost of issuance of common shares for the company is of 3 per share. The share is currently trading at 55 Estimate the cost of common share for the company and the cost of new common share issue.