3. You are employed in the Finance Division of a firm with 247750000 shares

Published by admin on September 15, 2020

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outstanding. The current share price is $38.52. The forecast earnings are $1814850000.

Calculate the current market value of firm equity and the earnings per Share (EPS).

The firm has accumulated a fund of $52953845 in excess cash and the directors want to

pay-out these funds to the shareholders. You have been asked to compare the effects of a

special one-time dividend and a share repurchase.

If the funds are paid out as a one-time dividend what will be the dividend per share

(DPS)? What will be firm value after the dividend? What will be the share price after the

dividend? What will be EPS after the dividend?

If the firm decides on a share repurchase how many shares will be purchased at what

price? How many shares will remain? What will be firm value after the repurchase? What

will be the share price after the repurchase? What will be EPS after the repurchase?