Parnell Bolts Inc. has 20 million common shares outstanding and net income of $30 million. The stock
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Parnell Bolts Inc. has 20 million common shares outstanding and net income of $30 million. The stock sells at a P/E of 15. The company has $5 million available to pay the next quarterly dividend, but is considering a repurchase instead.
a. If Parnell pays the cash dividend, what will be its dividend yield on an annualized basis?
b. How many shares will be redeemed if the repurchase option is chosen and the stock is acquired at market value?
c. What will be the EPS after the repurchase if earnings remain unchanged?
d. What will be the new stock price if the P/E remains unchanged?
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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a EPS 30M20M shares 150 P EPS PE 15 15 2250 Dividend p...View the full answer
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