Vegas Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years but is currently contemplating some kind of dividend. The capital accounts for the firm are: Common stock (2,800,000 shares) Retained earnings $28,000,000 26,000,000 Net worth $54,000,000 The company's stock is selling for $20 per share, and it earned $5,600,000 during the year with 2,800,000 shares outstanding, indicating a P/E ratio of 10. a. Restate the capital accounts at year end after the 10% stock dividend. Common stock Retained earnings Net worth b. Restate the EPS and share price. (Assume the P/E ratio remains constant.) (Do not round intermediate calculations. Round the final answers to 2 decimal places.) EPS Share price c. How many shares would an investor end up with if he or she originally had 90 shares? Number of shares shares d. If an investor originally had 90 shares, what is the investor's total investment worth before and after the stock dividend if the P/E ratio remains constant? (Do not round intermediate calculations.) The Belton Corporation has $6 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E of 15. 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? Dividends per share $ c. If the $3 million is used to repurchase shares in the market at a premium price of $93.0 per share, how many shares will be reacquired? (Round the 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? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of securities $ e-2. By how much, in terms of dollars, did the repurchase change the share price? 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? Yes No Vegas Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years but is currently contemplating some kind of dividend. The capital accounts for the firm are: Common stock (2,800,000 shares) Retained earnings $28,000,000 26,000,000 Net worth $54,000,000 The company's stock is selling for $20 per share, and it earned $5,600,000 during the year with 2,800,000 shares outstanding, indicating a P/E ratio of 10. a. Restate the capital accounts at year end after the 10% stock dividend. Common stock Retained earnings Net worth b. Restate the EPS and share price. (Assume the P/E ratio remains constant.) (Do not round intermediate calculations. Round the final answers to 2 decimal places.) EPS Share price c. How many shares would an investor end up with if he or she originally had 90 shares? Number of shares shares d. If an investor originally had 90 shares, what is the investor's total investment worth before and after the stock dividend if the P/E ratio remains constant? (Do not round intermediate calculations.) The Belton Corporation has $6 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E of 15. 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? Dividends per share $ c. If the $3 million is used to repurchase shares in the market at a premium price of $93.0 per share, how many shares will be reacquired? (Round the 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? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price of securities $ e-2. By how much, in terms of dollars, did the repurchase change the share price? 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? Yes No
