Answered step by step
Verified Expert Solution
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
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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started