Solution-Evaluate the two alternatives in terms of the

Evaluate the two alternatives in terms of the effect

Reference no: EM13538657

Repurchase versus Cash Dividend. Ambers Corporation is deciding whether to pay out $500 in excess cash in the form of an extra dividend or a share repurchase. Current earnings are $2.50 per share, and the stock sells for $25. The market value balance sheet before paying out the $500 is as follows:

Market Value Balance Sheet
(before paying excess cash)
Excess cash	$500	Debt	$500
Other assets	2,500	Equity	2,500
Total	$3,000	Total	$3,000

Evaluate the two alternatives in terms of the effect on the price per share of the stock, the EPS, and the PE ratio.

Reference no: EM13538657

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Evaluate the two alternatives in terms of the effect

Reference no: EM13538657

Reference no: EM13538657

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