The Carlton Corporation has $5 million in earnings after taxes and 2 million shares outstanding. The stock trades at a P/E of 20. The firm has $4 million in excess cash.
a. Compute the current price of the stock?
b. If the 4 million is used to pay dividends, how much will dividends per share be?
c. If the 4 million is used to repurchase shares in the mrket at a price of 54 per share, how many shares will be acquired?
d. What will the new earnings per share be?
e. If the P/E ratio remains constant, what will the price of the securities be? By how much, in terms of dollars, did the repurchase increase the stock price?
f. Has the stockholders' total wealth changed as a result of the stock repurchase as opposed to receicing the cash dividend?
g. What are some reasons a corporation may wish to repurchase its own shares in the market?
Answers: 1
Another question on Business
Business, 21.06.2019 13:30
Suppose you want to know if more technical service calls are made to homes with cable television or with satellite dish television. should you use frequencies or relative frequencies to make the comparison? why?
Answers: 1
Business, 21.06.2019 15:10
Gideon company uses the allowance method of accounting for uncollectible accounts. on may 3, the gideon company wrote off the $2,200 uncollectible account of its customer, a. hopkins. on july 10, gideon received a check for the full amount of $2,200 from hopkins. the entry or entries gideon makes to record the write off of the account on may 3 is:
Answers: 3
Business, 21.06.2019 23:30
Which alternative accounting method allows farmers to record expenses and incomes in the year in which they sell their yield? gaap allows for the method, which permits farmers to subtract the expenses of producing the crop in the year in which they sell the yield and earn the revenue.
Answers: 3
Business, 22.06.2019 20:00
What is the difference between total utility and marginal utility? a. marginal utility is subject to the law of diminishing marginal utility while total utility is not. b. total utility represents the consumer optimum while marginal utility gives the total utility per dollar spent on the last unit. c. total utility is the total amount of satisfaction derived from consuming a certain amount of a good while marginal utility is the additional satisfaction gained from consuming an additional unit of the good. d. marginal utility represents the consumer optimum while total utility gives the total utility per dollar spent on the last unit.
Answers: 3
You know the right answer?
The Carlton Corporation has $5 million in earnings after taxes and 2 million shares outstanding. The...
Questions
History, 02.12.2020 16:40
Mathematics, 02.12.2020 16:40
Mathematics, 02.12.2020 16:40
