You are viewing Andrea Chance's screen View Options W AutoSave Off H - C Document3 Word...

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You are viewing Andrea Chance's screen View Options W AutoSave Off H - C Document3 Word Search File Home Insert Draw Design Layout References Mailings Review View Help Times New Roman v 12 A A Aav Paste BIU v A ab x x v Clipboard Font Paragraph 7 Normal No Spacing Heading Styles A Andrea Chance AC Sign in View Comments Editing Share E Editing Dictate Editor Sensitivity Add-ins The Britney Corporation has $4 million in earnings aftertax and 1 million shares outstanding. The stock trades at a P/E of 10. The firm has $3 million in excess cash. a) Compute the current price of the stock. b) If the $3 million is used to pay dividends, how much will dividends per share be? c) If the $3 million is used to repurchase shares in the market at a premium price of $43.00 per share, how many shares will be reacquired? (Round to the nearest share.) d) What will the new earnings per share be? (Round to the nearest cent.) e) If the P/E remains constant, what will the new price of the securities be? By how much, in terms of dollars, did the repurchase increase the share price? f) Has the shareholder's total wealth changed as a result of the stock repurchase as opposed to the cash dividend? g) What are some other reasons a corporation may wish to repurchase its own shares in the market? Voice Sensitivity Editor Add-ins Focus + 100% CC A Leave Chat Share Screen Show Captions Reactions Apps Whiteboards Notes e 2 of 3 546 words English (Canada) Text Predictions: On Accessibility: Good to go Unmute Start Video 20 ^ Participants You are viewing Andrea Chance's screen View Options W AutoSave Off H - C Document3 Word Search File Home Insert Draw Design Layout References Mailings Review View Help Times New Roman v 12 A A Aav Paste BIU v A ab x x v Clipboard Font Paragraph 7 Normal No Spacing Heading Styles A Andrea Chance AC Sign in View Comments Editing Share E Editing Dictate Editor Sensitivity Add-ins The Britney Corporation has $4 million in earnings aftertax and 1 million shares outstanding. The stock trades at a P/E of 10. The firm has $3 million in excess cash. a) Compute the current price of the stock. b) If the $3 million is used to pay dividends, how much will dividends per share be? c) If the $3 million is used to repurchase shares in the market at a premium price of $43.00 per share, how many shares will be reacquired? (Round to the nearest share.) d) What will the new earnings per share be? (Round to the nearest cent.) e) If the P/E remains constant, what will the new price of the securities be? By how much, in terms of dollars, did the repurchase increase the share price? f) Has the shareholder's total wealth changed as a result of the stock repurchase as opposed to the cash dividend? g) What are some other reasons a corporation may wish to repurchase its own shares in the market? Voice Sensitivity Editor Add-ins Focus + 100% CC A Leave Chat Share Screen Show Captions Reactions Apps Whiteboards Notes e 2 of 3 546 words English (Canada) Text Predictions: On Accessibility: Good to go Unmute Start Video 20 ^ Participants