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See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco repurchases 2 million shares each year from 2016
See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco repurchases 2 million shares each year from 2016 to 2019. What would be its earnings per share in 2019? (Assume Mydeco pays for the shares using its available cash and that Mydeco earns no interest on its cash balances.) (Select the best choice below.) A. A repurchase does not impact earnings directly, so any change to EPS will come from a reduction in shares outstanding. 2019 shares outstanding = 55.9 million - 42 million = 47.9 million, EPS = $16.5 million / 47.9 million = $0.34. B. A repurchase does not impact earnings directly, so any change to EPS will come from an increase in shares outstanding. 2019 shares outstanding = 55.9 million + 4x2 million = 53.9 million, EPS $16.5 million / 53.9 million = $0.31. C. A repurchase does not impact earnings directly, so any change to EPS will come from a reduction in shares outstanding. 2019 shares outstanding = 55.9 million - 4x2 million = 47.9 million, EPS = $20.1 million / 47.9 million = $0.42. OD. A repurchase does not impact earnings directly, so any change to EPS will come from an increase in shares outstanding. 2019 shares outstanding =55.9 million + 4x2 million = 53.9 million, EPS = $20.1 million / 53.9 million = $0.37. Next
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