Answer to Question #244384 in Economics for Ceboh

Question

 Determine the new share price, EPS and price earnings ratio under both alternatives ( ie. Pay the dividend or repurchase the shares) 

Answer 1

Earnings per share is calculated by taking the net income earned by the corporate and dividing it by the number of outstanding shares issued.

Price / Earnings ratio (P/E ratio) is measured by dividing the share price by the earnings per share. P/E and EPS are two of the most frequently used ratios.