How many shares can be purchased in lieu

Reference no: EM13272537

A firm has earnings available to common stock holders of $2 million and has 500,000 shares of common outstanding. The stock sells for $62/share. The firm is contemplating the payment of $2/share in cash dividends to its 500,000 stockholders. Mr. Lu, its CFO suggests that they should use the total amount of cash dividend and buy-back their stock thus helping its stockholders. If the firm can repurchase stock at $62/share, (a) how many shares can be purchased in lieu of making dividend payment; (b) How much will the EPS be before and after the repurchase? (c) If the P/E ratio of 15 remains the same what will be the market price after the repurchase?

Reference no: EM13272537

Questions Cloud

Determine the change in heat of the hot water : Suppose 28.5 kg of 87.5°C water is placed in contact with 28.5 kg of 11°C water. What is the change in heat (in J) of the hot water

The constant growth dividend valuation model : Estimate the constant dividend growth rate of the stock for the foreseeable future.You need to justify this rate based on your economic, industry and company analyses.

Why does the cost of equity increase : Why does the cost of equity increase with an increased use of debt in the capital structure?

Determine the estimate of accurate to one percent : Using the Chebyshev inequality, predict how many samples you'll need to take from an exponential distribution in order to obtain, with a probability of at least .95, an estimate of accurate to one percent.

How many shares can be purchased in lieu : If the firm can repurchase stock at $62/share, (a) how many shares can be purchased in lieu of making dividend payment; (b) How much will the EPS be before and after the repurchase? (c) If the P/E ratio of 15 remains the same what will be the mark..

Biography of william shakespeare : Can i have " a university level essay" about a biography of William Shakespeare with CITATIONS in four or five pages?

Compute the mass of jupiter : Io, a satellite of Jupiter, has an orbital period of 1.77 days and an orbital radius of 4.22 x 10^5 km. From these data, determine the mass of Jupiter

Which comes closest to the amount of money that needs : Suppose that the parents estimate that the cost of tuition will be $86,000 per year for the first three years, but that the fourth year's tuition will be $96,000. Which comes closest to the amount of money that needs to be set aside today if the i..

Express p and a in cylin and spher cordinates : Giiven point p( -2 6 3) and vector a=yax +(x+z)ay. Express p and a in cylin and spher cordinates.eval a and p in the cartesian,cylin,and spherical systeem

User Account

All Pages