financial statements, Reindeer has reported that the latest after-tax profit (net income) is $600 million. With 250 million shares of common stock outstanding, Reindeer announced to distribute $400 million of dividends to its shareholders. Reindeer stock is now trading at $32 per share. a. What is the 'earnings per share' (EPS) of Reindeer Corporation? 2 marks b. What is the historical 'price-earnings' (PE) ratio of Reindeer Corporation? 2 marks c. Suppose that the Reindeer Corporation does not have any outstanding debt and the current share price reflects the fair value of the Corporation. i. What is the market value of Reindeer Corporation before the exdividend date? ii. What is the market value of Reindeer Corporation after the ex-dividend date? iii. What is the price per share of Reindeer Corporation after the exdividend date? iv. Calculate the value of Santa's wealth who holds 3,000 shares of Reindeer Corporation before the ex-dividend date. v. Calculate the dividend income of Santa who holds 3,000 shares of Reindeer Corporation until the ex-dividend date. vi. Calculate the value of shareholding on the ex-dividend date of Santa who holds 3,000 shares of Reindeer Corporation. 12 marks Show all your calculations. d. Referring to your answers in part ( c ), will it be different for Santa to sell his shares before the ex-dividend date or to hold his shares until the ex-dividend date in order to receive the dividends? Suppose that the dividend is paid on the ex-dividend date. Briefly explain your answers. 4 marks financial statements, Reindeer has reported that the latest after-tax profit (net income) is $600 million. With 250 million shares of common stock outstanding, Reindeer announced to distribute $400 million of dividends to its shareholders. Reindeer stock is now trading at $32 per share. a. What is the 'earnings per share' (EPS) of Reindeer Corporation? 2 marks b. What is the historical 'price-earnings' (PE) ratio of Reindeer Corporation? 2 marks c. Suppose that the Reindeer Corporation does not have any outstanding debt and the current share price reflects the fair value of the Corporation. i. What is the market value of Reindeer Corporation before the exdividend date? ii. What is the market value of Reindeer Corporation after the ex-dividend date? iii. What is the price per share of Reindeer Corporation after the exdividend date? iv. Calculate the value of Santa's wealth who holds 3,000 shares of Reindeer Corporation before the ex-dividend date. v. Calculate the dividend income of Santa who holds 3,000 shares of Reindeer Corporation until the ex-dividend date. vi. Calculate the value of shareholding on the ex-dividend date of Santa who holds 3,000 shares of Reindeer Corporation. 12 marks Show all your calculations. d. Referring to your answers in part ( c ), will it be different for Santa to sell his shares before the ex-dividend date or to hold his shares until the ex-dividend date in order to receive the dividends? Suppose that the dividend is paid on the ex-dividend date. Briefly explain your answers. 4 marks
