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Alex, Inc. is financed 100% with equity. The firm has 100,000 shares of stock outstanding with a market price of $5 per share. Total earnings for the most recent year are $50,000. The firm has cash of $25,000 in excess of what is necessary to fund its positive NPV projects. The firm is considering using the cash to pay an extra dividend of $25,000 or, alternatively, to repurchase $25,000 of stock. The firm has other assets worth $475,000 (market value). For each of the questions that follow, assume there are no transaction costs, taxes, or other market imperfections.

a) Assume the firm pays the $25,000 excess cash in the form of a cash dividend. What will be the firm's earnings per share once the dividend is paid? (3 marks)

b) Assume the firm pays the $25,000 excess cash in the form of a cash dividend. You own 1,000 shares and this comprises your total wealth. Once the dividend is paid, what is your total wealth? (3 marks)

c) Assume the firm pays the $25,000 excess cash in the form of a cash dividend. What will be the firm's P/E ratio once the dividend is paid? (3 marks)

d) After speaking with the board of directors, Alex, Inc. decides to issue a special dividend with a total of 25,000 on March 29 th , 2023, to all shareholders of record as of March 15 th . If you purchase the stock on Tuesday March 14th , right after the market opens. How many dividends will you gain on March 29 th ? Please explain your answer. (2 marks)