Use the following information to answer Questions 1-4.

ABC Corporation is an all-equity firm. The total market value of the firm is $60 million (which includes $20 million in cash), and there are 1,500,000 shares outstanding. There are no taxes. The firm is considering using $15 million of cash to pay a special one-time dividend or repurchase shares. The companys current earnings per share are $5.00. If the firm pays the dividend, the share price of ABC stock on the ex-dividend date $30. New share price after the share repurchase $40.

1a. If the firm chooses the share repurchase, what will be the new earnings per share (EPS)?

b. If the firm pays the dividend, what will be the new earnings per share (EPS)?