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FM Donut Bakery s net income for the current year is $ 2 million. It has 5 0 0 , 0 0 0 common shares
FM Donut Bakerys net income for the current year is $ million. It has common shares outstanding and its stock trades at $ per share. Suppose FM wants to maintain a dividend payout ratio for the current year. Instead of paying cash dividends, FM is thinking of using the cash meant for the dividends to repurchase its own stock. Suppose FM can repurchase its stock at the current price. what will be FMs PE ratio after the repurchase assuming that the repurchase has no effect on stock prices.
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