Everystate Inc. is evaluating an extra dividend versus a share

repurchase. In either case, $$9,000$ would be spent. Current

earnings are $$1\mathrm{.}30$ per share and the stock currently sells for

$$64$ per share. There are $1,000$ shares outstanding. In answering

the questions that follow, ignore taxes for the first two:

i$)$ Evaluate the two choices in terms of their effect on the

price per share of stock and shareholder wealth

$(2$ marks$)$

$3$

ii$)$ What will be the effect on Everystate$$s EPS and P$/$E ratio

under the two different scenarios?

$(2$ marks$)$

iii$)$ In the real world, which of these choices will you

recommend? Why?