Purki Ltd is deciding whether to pay out R90 000 in excess cash in the form of extra dividend or 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

Total 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

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

1.3.1 Calculate the new share price

1.3.2 The EPS

1.3.3 The Price Earnings Ratio