Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Stock repurchase the following financial data on the Bond Recording Company are available: : The firm is currently considering whether it should use $450,000 of

image text in transcribed

Stock repurchase the following financial data on the Bond Recording Company are available: : The firm is currently considering whether it should use $450,000 of its earnings to help pay cash dividends of $1.29 per share or to repurchase stock at $33 per share. a. Approximately how many shares of stock can the firm repurchase at the $33-per-share price, using the funds that would have gone to pay the cash dividend? b. Calculate the EPS after the repurchase. c. If the stock still sells at 16 times earnings, what will the market price be after the repurchase? d. Compare the pre- and post-repurchase earnings per share. e. Compare and contrast the stockholders' positions under the dividend and repurchase alternatives. What are the tax implications under each alternative? Data Table - X mber.) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) $700,000 350.000 Earnings available for common stockholders Number of shares of common stock outstanding Earnings per share ($700,000 = 350,000) Market price per share Pricelearnings (P/E) ratio ($32 - $2) $32 Check

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management Theory And Practice

Authors: Prasanna Chandra

9th Edition

9339222571, 978-9339222574

More Books

Students also viewed these Finance questions

Question

1. Ask students to include a rationale for their selections.

Answered: 1 week ago

Question

10-9 How have social technologies changed e-commerce?

Answered: 1 week ago