Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a PF of 10. The firm has

image text in transcribed

The Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a PF of 10. The firm has $1 million in excess cash a. Computer the current price of the stock. (Do not round intermediate calculations and round your answer to 2 decimal places.) Current price b. If the $1 million is used to pay dividends, how much will dividends per share be? (Do not round intermediate calculations and your answer to 2 decimal places.) Dividends per share c. If the $1 million used to repurchase shares in the market at a price of $41 per share, how many share will be acquired? [Do not round intermediate calculations and round your answer to the nearest whole share.) Number of shares acquired share d. What will the new earnings per share be? (Use the rounded number of shares computed in part c but do not round any other intermediate calculations. Round your answer to 2 decimal places.) Earnings per share e-1. If the PIE ratio remains constant, what will the price or the securities be? (Use the rounded answer from part d and round your answer to the nearest whole dollar.) Stock price e-2. By how much, in some of dollars, did the repurchase increase the stock price? (Use the rounded whole dollar answer from part e-1.A negative value should be indicated with a minus sign. Round your answer to the nearest whole dollar.) Stock price increase/decrease Has the stockholders' total changed as a result of the stock, repurchase as to receiving the cash dividend

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

Climate Finance

Authors: Richard B. Stewart, Benedict Kingsbury, Bryce Rudyk

1st Edition

081474138X, 978-0814741382

More Books

Students also viewed these Finance questions

Question

What is Ramayana, who is its creator, why was Ramayana written?

Answered: 1 week ago

Question

To solve by the graphical methods 2x +3y = 9 9x - 8y = 10

Answered: 1 week ago