Big Industries has the following market-value balance sheet. The stock currently sells for $20 a share, and there are 1,340 shares outstanding. The firm will either pay a dividend of $1 per share or repurchase $1,340 worth of stock. Ignore taxes.

Assets Liabilities and Equity

Cash $8800 Debt 11700

Fixed Assets $ 29700 Equity $ 26800

a. What will be the subsequent price per share if the firm pays a dividend?

b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.)

c. If total earnings of the firm are $39,900 a year, find earnings per share if the firm pays a dividend. (Round your answer to 3 decimal places.)

d. Now find earnings per share if the firm repurchases stock. (Round your answer to 3 decimal places.)

e. Find the price-earnings ratio if the firm pays a dividend. (Round your answer to 2 decimal places.)

f. Find the price-earnings ratio if the firm repurchases stock. (Round your answer to 2 decimal places.)

g. Adherents of the "dividends-are-good" school sometimes point to the fact that stocks with high dividend payout ratios tend to sell at above-average price-earnings multiples. Is Big Industries' P/E ratio higher if it pays a dividend?