Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please Help with these 2 problems. Thank you Problem1: Problem 2: A stock is currently trading for $37. The company has a price-earnings multiple of
Please Help with these 2 problems. Thank you
Problem1:
Problem 2:
A stock is currently trading for $37. The company has a price-earnings multiple of 10 . There are 100 million shares outstanding. Your model indicates that the stock is actually worth $47. The company announces that it will use $350 million to repurchase shares. a. After the repurchase, what is the value of the stock, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. After the repurchase, what is the actual price-earnings multiple of the stock? Do not round intermediate calculations. Round your answer to two decimal places. c. If the company had used the $350 million to pay a cash dividend instead of doing a repurchase, how would the value of the stock have changed, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. The market value of the stock is now $ d. If the company had used the $350 million to pay a cash dividend instead of doing a repurchase, what would be the actual price-earnings multiple after the dividend? Do not round intermediate calculations. Round your answer to two decimal places. A stock is currently trading for $31. The company has a price-earnings multiple of 10 . There are 100 million shares outstanding. Your model indicates that the stock is actually worth $26. The company announces that it will use $330 million to repurchase shares. a. After the repurchase, what is the value of the stock, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. After the repurchase, what is the actual price-earnings multiple of the stock? Do not round intermediate calculations. Round your answer to two decimal places. c. If the company had used the $330 million to pay a cash dividend instead of doing a repurchase, how would the value of the stock have changed, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. The market value of the stock is now \$ d. If the company had used the $330 million to pay a cash dividend instead of doing a repurchase, what would be the actual price-earnings multiple after the dividend? Do not round intermediate calculations. Round your answer to two decimal placesStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started