a. No. of shares can be repurchased using fund available for cash dividend = Fund for Dividend / per share repurchase price
No. of shares = $450000 / $32
= 14063
b. EPS after purchase
EPS = Total Earnings / Total outstanding shares after repurchase
EPS = ($500000) / (250000 - 14063)
EPS = $500000 / 235937
= $2.12
c. Stock selling at 15 times earning means PE Ratio = 15
PE Ratio = Market Price per share / EPS
15 = Market Price / $2.12
Market Price= 15 * $2.12
= $31.8
d. Pre purchase EPS =$2
Post purchase EPS = $2.12
EPS increases due to repurchase plan as no. of outstanding shares decrease which increases EPS.
e. Under dividend plan, they will be receiving dividend per share $1.8 but under repurchase plan they will receive less dividend currently (only from remaining $50000), as repurchase done from the net earnings. So repurchase plan from earnings not good for equity holder in this situation.
Dividend are subject to ordinary income tax and repurchase are taxed at capital gain rate.
Stock repurchase The following financial data on the Bond Recording Company are available: EE repurchase stock at $32 per share. The firm is currently considering whether it should use $450,000 of it...
Please answer all parts A, B, C, D, E. Thank you! Stock repurchase the following financial data on the Bond Recording Company are available . The firm is currently considering whether it should use $450.000 of its camins to help pay cash dividends of $129 per share or to repurchase lock at $31 per share Approximately how many shares of stock can the firm purchase the $31-per-share pricing the Bundesha w a ve gone to pay the cash dividend? b....
6. Stock repurchases Companies with excess cash often employ share repurchase plans in place of or along with cash dividends. Share repurchase plans can help investors liquidate their holdings by selling their stock to the issuing company and earning from capital gains. Consider the case of St. Sebastian Company: St. Sebastian Company has forecasted a net income of $5,300,000 for this year. Its common stock currently trades at $21 per share, and the company currently has 830,000 shares of common...
9. Stock repurchases Companies with excess cash often employ share repurchase plans in place of or along with cash dividends. Share repurchase plans can help investors liquidate their holdings by selling their stock to the issuing company and earning from capital gains. Consider the case of St. Sebastian Inc.:St. Sebastian Inc. has forecasted a net income of $5,700,000 for this year. Its common stock currently trades at $19 per share, and the company currently has 830,000 shares of common stock outstanding. It...
9. Stock repurchases Companies with excess cash often employ share repurchase plans in place of or along with cash dividends. Share repurchase plans can help investors liquidate their holdings by selling their stock to the issuing company and earning from capital gains. Consider the case of Sixty-second Avenue Company. Sixty-second Avenue Company has forecasted a net income of $4,200,000 for this year. Its common stock currently trades at $21 per share, and the company currently has 720,000 shares of common stock outstanding. It...
Companies with excess cash often employ share repurchase plans in place of or along with cash dividends. Share repurchase plans can help investors liquidate their holdings by selling their stock to the issuing company and earning from capital gains. Consider the case of St. Sebastian Company: St. Sebastian Company has forecasted a net income of $5,100,000 for this year. Its common stock currently trades at $20 per share, and the company currently has 790,000 shares of common stock outstanding. It...
Need help answering this problem please Stock dividend Investor Personal Finance Problem Security Data Company has outstanding 60,000 shares of common stock currently selling at $36 per share. The firm most recently had earnings available for common stockholders of $106,000, but it has decided to retain these funds and is considering a 20% stock dividend in lieu of a cash dividend. a. Determine the firm's current earnings per share. b. If Sam Waller currently owns 500 shares of the firm's...
The following information is available for Jase Company: Market price per share of common stock $25.00 Earnings per share on common stock $2.00 Which of the following statements is correct? A. The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year. B. The price-earnings ratio is 5% and a share of common stock was selling for 5% more than the amount of...
This financial information is available for Klinger Corporation. The weighted-average number of shares of common stock outstanding was 180,500 for 2016 and 152,000 for 2017. Calculate earnings per share and return on common stockholders’ equity for 2017 and 2016 2017 2016 Average common stockholders’ equity $1,750,000 $2,090,000 Dividends paid to common stockholders 90,500 71,500 Dividends paid to preferred stockholders 16,000 16,000 Net income 291,500 250,000 Market price of common stock 19 27
Stock dividend-Investor Personal Finance Problem Security Data Company has outstanding 50,000 shares of common stock currently selling at $45 per share. The firm most recently had earnings available for common stockholders of $149,000, but it has decided to retain these funds and is considering a 5% stock dividend in lieu of a cash dividend. a. Determine the firm's current earnings per share. b. If Sam Waller currently owns 600 shares of the firm's stock, determine his proportion of ownership currently...
Exercise 13-16 Earnings per share LO A1 Ecker Company reports $1,275,000 of net income and declares $178,500 of cash dividends on its preferred stock for the year. At year- end, the company had 290,000 weighted average shares of common stock 1. What amount of net income is available to common stockholders? Net income To preferred stockholders Net income available to common stockholders $ 2. What is the company's basic EPS? < Prev 3 of 8 Next > your search 199....