Notukula Ltd is deciding whether to pay out R90 000 in excess cash in the form...
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Notukula 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 Debt 160 000 400 000 Bank/cash Other Assets 1.1 1.2 1.3 1.4 1.5 Evaluate each alternative (i.e: pay the dividend or repurchase the shares) by calculating: 90 000 310 000 400 000 Number of shares in issue Dividends per share (for the first alternative, i.e. pay the dividend) New share price Earnings per share Price-earnings ratio (5) (3) (7) (5) (5) Notukula 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 Debt 160 000 400 000 Bank/cash Other Assets 1.1 1.2 1.3 1.4 1.5 Evaluate each alternative (i.e: pay the dividend or repurchase the shares) by calculating: 90 000 310 000 400 000 Number of shares in issue Dividends per share (for the first alternative, i.e. pay the dividend) New share price Earnings per share Price-earnings ratio (5) (3) (7) (5) (5)
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Answer rating: 100% (QA)
To evaluate each alternative lets calculate the required values 11 Number of shares in issue The number of shares in issue can be calculated by dividing the equity by the current price per share Numbe... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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