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The Belton Corporation has $6 million in earnings after taxes and 3 million shares outstanding. The stock trades at a P/E of 20. The
The Belton Corporation has $6 million in earnings after taxes and 3 million shares outstanding. The stock trades at a P/E of 20. The firm has $3 million in excess cash. a. Compute the current price of the stock. Current price b. If the $3 million is used to pay dividends, how much will dividends per share be? (Round the final answer to 1 decimal place.) Dividends per share $ c. If the $3 million is used to repurchase shares in the market at a premium price of $41.0 per share, how many shares will be reacquired? (Round intermediate calculations and final answer to the nearest whole number.) Number of shares acquired d. What will the new EPS be? (Round intermediate calculations and final answer to 2 decimal places.) Earnings per share $ e-1. If the P/E remains constant, what will the new price of the securities be? (Round intermediate calculations and final answer to 2 decimal places.) Price of securities $ e-2. By how much, in terms of dollars, did the repurchase change the share price? (Round the final answer to 1 decimal place.) The stock price has (Click to select) by $ f. Has the shareholder's total wealth changed as a result of the stock repurchase as opposed to the cash dividend?
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