Question
Dixies has a market value balance sheet as shown below. The firm currently has 2,200 shares of stock outstanding and net income of $10,500. Market
Dixies has a market value balance sheet as shown below. The firm currently has 2,200 shares of stock outstanding and net income of $10,500.
Market Value Balance Sheet
Excess Cash: $14,300 Debt: $84,600
Other Assets: $215,460 Equity: $145,160
Total: $229,760 $229,760
The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend. What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.
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Fundamentals Of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
1st Edition
0201844842, 978-0201844849
