Question 1 Stock repurchase The Off-Shore Steel Company has earnings available for common stockholders of $2 million and has 500,000 shares of common stock outstanding at $60 per share. The firm is currently contemplating the payment of $2 per share in cash dividends. Required: (a) Calculate the firm's current earnings per share (EPS) and price/earnings (PIE) ratio. (b) If the firm can repurchase stock at $62 per share, how many shares can be pur-chased in lieu of making the proposed cash dividend payment? (c) How much will the EPS be after the proposed repurchase? Why? (d ) If the stock sells at the old PIE ratio, what will the market price be after repurchase