Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case $5,500 would be spent. Current earnings are $.95 per share, and the stock currently sells for $30 per share. There are 230 shares outstanding. Ignore taxes and other imperfections.

a. What will be the effect on Flychuckers EPS and PE ratio under the two different scenarios?

b. In the real world, which of these actions would you recommend? Why?