Yellow Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would be spent. Current earnings are $1.16 per share and the stock currently sells for $45 per share. There are 2,300 shares outstanding. Ignore taxes and other imperfections.
NOTE: Fractional shares are possible (Ex. 0.54 shares)
Dividend = 2.39
Shares outstanding = 2300
Stock price = 42.61
After the $2.39 dividend, the price falls to $42.61 per share. What are earnings per share (EPS) and the price earnings (P/E) ratio? Enter your answers rounded to 2 DECIMAL PLACES.
EPS=
P/E Ratio =
Solution:
If the company choses to pay extra dividend then it means shares are not repurchased. Hence, there will be no impact on EPS, it will remain same $1.16 per share.
=42.61/1.16
= 36.73
Yellow Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would...
Yellow Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would be spent. Current earnings are $1.16 per share and the stock currently sells for $45 per share. There are 2,300 shares outstanding. Ignore taxes and other imperfections. NOTE: Fractional shares are possible (Ex. 0.54 shares) Dividend = 2.39 Shares outstanding = 2300 Stock price = 42.61 After the $2.39 dividend, the price falls to $42.61 per share. EPS=1.16 P/E Ratio =36.73 If Yellow Corp. goes...
Yellow Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would be spent. Current earnings are $1.16 per share and the stock currently sells for $45 per share. There are 2,300 shares outstanding. Ignore taxes and other imperfections. If Yellow Corp. pays a dividend, what will be the dividend per share? After the dividend is paid, how many shares will be outstanding and what will the price per share be? Enter your answers rounded to...
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