QUESTION ONE 1.1 Explain what a residual dividend policy / strategy is [20] 1.2 Blue Ltd is deciding whether to pay out R60 000 in excess cash in the form of an extra dividend or a share repurchase. Current profits are R3.00.pec share and the share sells for R30. Their abbreviated balance sheet before paying out the dividend is: Equity240 000 Debt 60 000 240000 300 000 Bank/Cash 60000 other assets 300 000 Evaluate each alternative (i.e. pay the dividend or repurchase the shares) by; 1.2.1 Calculate the number of shares in issue. 1.2.2 The dividends per share (for the first alternative, i.e. pay the dividend) 1.2.3 Calculate the new share price 1.2.4 The EPS 1.2.5 The Price-earnings ratio