Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Pukri Ltd is deciding whether to pay out R90 000 in excess cash in the form of an extra dividend or a share repurchase. Current

Pukri Ltd is deciding whether to pay out R90 000 in excess cash in the form of an extra

dividend or a share repurchase. Current profits are R2,40 per share and the share sells for

R20. The abbreviated balance sheet before paying out the dividend is:

Equity 240 000 Bank/cash 90 000

Debt 160 000 Other Assets 310 000

400 000 400 000

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

1.1 Calculating the number of shares in issue (4)

1.2 The dividends per share (for the first alternative, i.e. pay the dividend) (2)

1.3 Calculate:

1.3.1 The new share price (6)

1.3.2 The EPS (4)

1.3.3 The price-earnings ratio (4)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Mathematics Of Finance

Authors: Robert Brown, Petr Zima

2nd Edition

0071756051, 9780071756051

More Books

Students also viewed these Finance questions

Question

Who needs to be involved in facility location decisions?

Answered: 1 week ago