Shaan Company will either payout $4,000 extra dividend or do a $4,000 share repurchase. Its current...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Shaan Company will either payout $4,000 extra dividend or do a $4,000 share repurchase. Its current EPS are $.90 and its stock is currently trading at $35 per share. Shaan has 150 shares outstanding. Ignoring taxes: a. How will each alternative affect the share price and shareholder wealth? b. How will each alternative impact Shaan's EPS and PE ratio? c. What would be your advice as to which alternative should be chosen, in view of the real world considerations? Reason out your advice. Shaan Company will either payout $4,000 extra dividend or do a $4,000 share repurchase. Its current EPS are $.90 and its stock is currently trading at $35 per share. Shaan has 150 shares outstanding. Ignoring taxes: a. How will each alternative affect the share price and shareholder wealth? b. How will each alternative impact Shaan's EPS and PE ratio? c. What would be your advice as to which alternative should be chosen, in view of the real world considerations? Reason out your advice.
Expert Answer:
Answer rating: 100% (QA)
a Evaluation of Alternative Dividend Payment Dividend per share 4000 150 2667 Price per share before ... View the full answer
Related Book For
Corporate Finance
ISBN: 978-0077861759
10th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Posted Date:
Students also viewed these finance questions
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
Last Sale Net Bid Ask Open Int Puts Last Sale Net bid Ask Vol Open Int 16Aug 155.00(1619H155-E) 6.45 0.75 6.95 7.25 9 16Aug 155.00(1619T155-E) 1.18 (0.75) 1.17 1.25 61 4505 16Aug 166.00(1619H160-E)...
-
In February 1998, Steve Miller, the interim CEO of Waste Management, released his in-depth review of the company's audit practices. His findings stunned Wall Street: Waste Management, he announced,...
-
An unknown compound A of molecular formula of C10H180 reacts with H2S04 and heat to form two compounds (B and C) of molecular formula C10H16. B and C both react with H2 over Pd/C to form decalin....
-
What carbonyl compound and what phosphorus ylide might you use to prepare each of the followingcompounds? (c) (b) (a) "CH CH2 () (e) (d)
-
The grand prize for a lottery is \($1,000\) per year for 10 years and then \($500\) per year in perpetuity (i.e., the first \($500\) payment is at the end of year 11). If the relevant interest rate...
-
The test statistic F is never greater than 1. In Exercises 7 and 8, determine whether the statement is true or false. If the statement is false, rewrite it as a true statement.
-
The accounting firm of T, W & S was engaged to perform an audit of Progate Manufacturing Company. During the course of the audit, T, W & S discovered that the company had overvalued its inventory by...
-
Venus Corporation provided the following information regarding its single product: Direct materials used $240,000 Direct labour incurred $420,000 Variable manufacturing overhead $160,000 Fixed...
-
Given the increasing importance of sustainability and ethical consumption, how can companies authentically integrate these values into their marketing messaging and practices?
-
The placenta in human is- A. Haemo-endothelial B. Epitheliochorial C. Syndesmochorial D. Haemochorial
-
Though often reasonable, probable assertion is considered the lowest level of truth claim because it is based on individual taste or preference. O True O False
-
Eight slits equally separated by 0.149 mm is uniformly illuminated by a monochromatic light at A = 523 nm. What is the width of the central principal maximum on a screen 2.35 m away
-
How to apply the concept of organizational culture to health care organization and apply strategies that may be used to improve an organization's culture. Explain how a dissonance and constant...
-
Lifestyle choices affect our health from an early age. Explore pediatric obesity and discuss the following: Rates of obesity for your county. Is it trending up or down? Select an evidence-based...
-
Keswick Industries Limited has the following current assets and current liabilities on the company's balance sheet: Cash $17,000; Accounts Receivable $8.200; Inventory $54,000, Prepaid Rent $3,000;...
-
Consider the following method that divides an integer by 2: method DivideBy2(n: int) returns (x: int) ensures n % 2 == 0 => /* Omitted. */ ensures n % 2 == 1 ==> /* Omitted. */ /* The body of the...
-
Find the work done in pumping all the oil (density S = 50 pounds per cubic foot) over the edge of a cylindrical tank that stands on one of its bases. Assume that the radius of the base is 4 feet, the...
-
High electricity costs have made Farmer Corporations chicken-plucking machine economically worthless. Only two machines are available to replace it. The International Plucking Machine (IPM) model is...
-
You have recently won the super jackpot in the Washington State Lottery. On reading the fine print, you discover that you have the following two options: a. You will receive 31 annual payments of $...
-
You enter into a forward contract to buy a 10-year, zero coupon bond that will be issued in one year. The face value of the bond is $1,000, and the 1-year and 11-year spot interest rates are 5...
-
State the main audit objectives for (1) purchases and payroll transactions and (2)creditors balances.
-
For each of the six functions associated with processing payroll, identify one control.
-
What is the sequence of functions normally associated with processing of purchase transactions? For each function, identify one control.
Study smarter with the SolutionInn App