Exercise 2.AXA is planning to pay EUR 2.7 nillion in dividend to its common shareholders this year. Enclosed the following earnings and market price information for AXA:

Net income EUR 3,200,000

Number of shares 350,000

Earning per share 1,50

Price/ earnings ratio 20

Expected market price per share after the dividend payment 26

As an alternative to paying dividends, AXA is considering 2 options:

Option A - repurchase share at a price of EUR 21, which is the current market price plus the value of the proposed dividend of EUR 1. Evaluate the companys share price after the repurchase by calculating the EPS and estimated share price.

Option B - announce a 2 for 1 share split for its shareholders.

Assuming that AXA chose option B, how many shares outstanding would the company have and what would be its EPS after the split?

If you own 100 shares before the split, what would be your total earnings for your share before and after the split?

Would you be better off financially before or after the split?