Q&P Q13 Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case...

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Q&P Q13 Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case $4,000 would be spent. Current earnings are $2.10 per share, and the stock currently sells for $46 per share. There are 800 shares outstanding. Ignore taxes and other imperfections in answering parts (a) and (b). a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. b. What will be the effect on Flychucker's EPS and PE ratio under the two different scenarios? c. In the real world, which of these actions would you recommend? Why? Q&P Q15 Gibson Co. has a current period cash flow of $1.1 million and pays no dividends. The present value of the company's future cash flows is $15 million. The company is entirely financed with equity and has 600,000 shares outstanding. Assume the dividend tax rate is zero. a. What is the share price of the Gibson stock? b. Suppose the board of directors of Gibson Co. announces its plan to pay out 50 percent of its current cash flow as cash dividends to its shareholders. How can Jeff Miller, who owns 1,000 shares of Gibson stock, achieve a zero-payout policy on his own? Q&P Q13 Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case $4,000 would be spent. Current earnings are $2.10 per share, and the stock currently sells for $46 per share. There are 800 shares outstanding. Ignore taxes and other imperfections in answering parts (a) and (b). a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. b. What will be the effect on Flychucker's EPS and PE ratio under the two different scenarios? c. In the real world, which of these actions would you recommend? Why? Q&P Q15 Gibson Co. has a current period cash flow of $1.1 million and pays no dividends. The present value of the company's future cash flows is $15 million. The company is entirely financed with equity and has 600,000 shares outstanding. Assume the dividend tax rate is zero. a. What is the share price of the Gibson stock? b. Suppose the board of directors of Gibson Co. announces its plan to pay out 50 percent of its current cash flow as cash dividends to its shareholders. How can Jeff Miller, who owns 1,000 shares of Gibson stock, achieve a zero-payout policy on his own?