. The Carlton Corporation has $6 million in earnings after taxes and 3 million shares outstanding. The stock trades at a P/E of 10. The firm has $2 million in excess cash.

a.Compute the current price of the stock.

b.If the $2 million is used to pay dividends, how much will dividends per share be?

c.If the $2 million is used to repurchase shares in the market at a price of $22 per share, how many shares will be acquired?

d.What will the new earnings per share be?

e-1.If the P/E ratio remains constant, what will the price of the securities be?

Stock Price ______________

e-2.By how much, in terms of dollars, did the repurchase increase the stock price?