Consider a company whose net income (earnings) for the current year is $2,000,000. It has 5,000,000 shares outstanding. The current market price of the share is $8 per share. If the company uses the whole earnings to buy back shares at the market price, what will be the new earnings per share (EPS)? On the other hand, if the company distributes the whole earnings out as dividends, what will be the new EPS?