Yellow Corp. is evaluating an extra dividend versus a share repurchase. In either case, $5,000 would be spent. Current earnings are $1.02 per share and the stock currently sells for $38 per share. There are 1,600 shares outstanding. Ignore taxes and other imperfections.

If Yellow Corp. pays a dividend, what will be the dividend per share? After the dividend is paid, how many shares will be outstanding and what will the price per share be?

1 .Dividend = (3.13)

2 .Shares outstanding =(1,600)

3 .Stock price =(34.87)

After the $3.13 dividend, the price falls to $34.87 per share.What are earnings per share (EPS) and the price earnings (P/E) ratio?

4 .EPS= (1.02)

5 .P/E Ratio = (34.19)

If Yellow Corp. goes with the share repurchase, how many shares will they buy? After the repurchase, how many shares will be outstanding and what will the price per share be?

6 .Shares repurchased =(131.58)

7 .Shares outstanding = (1,468.42)

8 .Stock price =(38)

After therepurchase of 131.58 shares at the price $38, what are earnings per share (EPS) and the price earnings (P/E) ratio?

9 .EPS = (1.11)

10 .P/3 = (34.23)