What will the earnings per share be after such a repurchase

Assignment Help Financial Management

Reference no: EM13971086

Gamma Limited is contemplating using a certain amount of its profits to either pay cash dividend of $4 per share or to repurchase some of its ordinary shares. For current year the enterprise has distributable profits of $8,000,000 and 1,000,000 ordinary shares are issued.

The par value of these shares is $120. Should the enterprise decide to repurchase shares, it will have to pay the current market price of $136 per share.

Required

1. Calculate the current earnings per share

2. If the enterprise decides to rather repurchase shares, how many ordinary shares can it buy back with the profit allocated for dividends?

3. What will the earnings per share be after such a repurchase?

Reference no: EM13971086

Questions Cloud

In what sense is this a business problem : Declare bankruptcy/close Company.In what sense is this a business problem? A community problem? An individual problem?You are responsible for developing a plan of action for the Board of Directors.

How an organization goals influence organizational planning : Analyze how an organization's goals influence organizational planning that informs strategic decision making and Analyze the functions of management and ethical principles for executing effective decision making in organizations

Describe type of derivatives as well as underlying variable : Describe the type of derivatives as well as the underlying variable in one of the following derivative contracts: Life insurance Home mortgage Rate lock in a home mortgage Employee stock option Structured debt obligations and deposits Why would a fir..

Level of cognitive dissonance a consumer experience : 1. Is there a correlation between the level of cognitive dissonance a consumer experience and the number of choices on the market for the product prchased?

What will the earnings per share be after such a repurchase : Gamma Limited is contemplating using a certain amount of its profits to either pay cash dividend of $4 per share or to repurchase some of its ordinary shares. For current year the enterprise has distributable profits of $8,000,000 and 1,000,000 ordin..

Implement music on stairwells of your four-story building : Implement music on the stairwells of your four-story building so that it encourages employees to take the stairs more often for health improvement

Deterministic lot sizing-adjusting eoq : Per Norstrom supplies computer systems to a warehouse in Rotterdam. He sells 16 systems a week. The cost of an average system is $5,000, while order administration costs and delivery from Malaysia cost $1000. The lead time is around 4 weeks and ho..

Calculate the profit per share for an investor : Calculate the profit per share for an investor that exercises a put option with a strike price of $60 when the stock is selling for $46 and the premium for the put option was $4.

How best to present your financial information : Budgets and financial capabilities can be a daunting task associated with a grant proposal. Many grants request financial information because they may not fully fund your endeavor, and therefore require some type of matching funds

User Account

All Pages