Evaluating extra dividend versus share repurchase

Assignment Help Financial Management

Reference no: EM131070700

Flashback Corporation is evaluating an extra dividend versus a share repurchase. In either case, $32,500 would be spent. Current earnings are $2.90 per share, and the stock currently sells for $81 per share. There are 5,000 shares outstanding. Ignore taxes and other imperfections.

Requirement 1:

What will Flashback’s EPS and PE ratio be under the two different scenarios? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Extra Dividend Share Repurchase

EPS $ $

PE Ratio

Reference no: EM131070700

Questions Cloud

Portfolio expected return-variance and standard deviation : Consider the following information on a portfolio of three stocks: State of Economy Probability of State of Economy Stock A Rate of Return Stock B Rate of Return Stock C Rate of Return Boom .12 .09 .34 .53 Normal .53 .17 .19 .27 Bust .35 .18 –.18 –.3..

Goal is to create portfolio with expected return : You have $18,000 to invest in a stock portfolio. Your choices are Stock X with an expected return of 16 percent and Stock Y with an expected return of 11 percent. Assume your goal is to create a portfolio with an expected return of 12.10 percent. Req..

Flotation cost on preferred stock : A company has a capital structure of 45% debt, 5% preferred stock and 50% common equity. The company can obtain unlimited debt at an interest rate of 10%. The marginal tax rate is 35%. Find the after-tax cost of debt. Preferred stock carries a divide..

Cost data concerning the widget machine : The PARC Company, a large profitable corporation, has decided to purchase a new widget machine. The following cost data concerning the widget machine have been provided. First cost = $3,156,000. Salvage value = $119,000. Life = 10 Years. Direct purch..

Evaluating extra dividend versus share repurchase : Flashback Corporation is evaluating an extra dividend versus a share repurchase. In either case, $32,500 would be spent. Current earnings are $2.90 per share, and the stock currently sells for $81 per share. There are 5,000 shares outstanding. Ignore..

What is the company optimal capital budget : A company has a WACC1=12.5% for funding up to $4 million when retained earnings are used. They also have a WACC2=13.7% for funding above $4 million when new equity is raised. If they have the following independent investment opportunities, which proj..

Botanist has produced a new variety of hybrid wheat : A botanist has produced a new variety of hybrid wheat that is better able to withstand drought than other varieties. The botanist knows that for the parent plants, the proportion of seeds germinating is 80%. The proportion of seeds germinating for th..

Examine how company in industry does their accounting : The accounting systems paper can take one of two approaches. For whichever industry you chose either find a software accounting system or examine how a company in the industry does their accounting. Generally it is easier to find a software for the i..

User Account

All Pages