Brittania Hotels (Pty) Ltd is deciding whether to pay out R100 000 in excess cash in the form of an extra dividend or implement a share repurchase. Net profit after tax is R155 000 and the share sells for R10. Their summarized statement of Financial Position prior to the dividend payment is as follows:

Assets Equity and Liabilities

Tangible assets 340 000 Equity 500 000 Inventories 50 000 Debt 100 000 Receivables 70 000 Bank/cash 14 000 Total 600 000 Total 600 000

Evaluate each alternative (i.e. pay the dividend or repurchase the shares) by: 4.1 Calculating the number of shares in issue. (2) 4.2 Calculating the dividends per shares( only for the first alternative, i.e. pay the dividend). (2) 4.3 Calculating the new share price. (8) 4.4 Calculating the EPS. (4) 4.5 Calculating the Price-Earnings ratio. (4)

BACHELOR OF COMMERCE: