Fastspeed Couriers has experienced one of their toughest years yet. They are deciding whether to pay out R80 000 in accumulated cash in the form of an extra dividend to shareholders or embark on a share repurchase campaign. Current profits are R3.40 per share and the share sells for R36. Their abbreviated balance sheet before paying out the dividend is as follows:

Assets

Bank/Cash 100 000

Other Assets 280 000

Total 380 000

Equity & Liability

Equity 310 000

Debt 70 000

Total 380 000

Evaluate each alternative (i.e. pay the dividend or repurchase the shares) by:

1.1 Calculating the number of shares in issue. (2)

1.2 Calculating the dividends per shares (only for the first alternative, i.e. pay the dividend). (2)

1.3 Calculating the new share price. (4)

1.4 Calculating the EPS. (5)

1.5 Calculating the Price-Earnings ratio. (4)