Flashback Corporation is evaluating an extra dividend versus a share repurchase. In either case, 16320 would be spent. Current earnings are $3.10 per share, and the stock currently sells for $85 per share. There are 3400 shares outstanding. Ignore taxes and other imperfections in answering the first two questions.

A. Evaluate the two alternatives in terms of effect on price per share of the stock and shareholder wealth.

B. What wil be the effect on Flashback's EPS and PE ratio under two different senario?

C. In the real world, which of these actions would you recomend? Why?