You are employed in the Finance Division of a firm that has 567,562,000 shares outstanding. The current share price is $27.86. The forecast earnings are $1,788,570,000.
Calculate the current market value of firm equity and the earnings per Share (EPS).
The firm has accumulated a stockpile of $2,500,000,000 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 special dividend, what will be the dividend per share (DPS)? What is the firm value after the dividend? What is the share price after the dividend? What is the EPS after the dividend?
If the firm executes a share repurchase, how many shares can it purchase at what price? How many shares will remain? What is the firm value after the repurchase? What is the share price after the repurchase? What is the EPS after the repurchase?