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How many shares will be reacquired

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The Belton Corporation has $7 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.

Problem a. Compute the current price of the stock.

Problem b. If the $4 million is used to pay dividends, how much will dividends per share be?

Problem c. If the $4 million is used to repurchase shares in the market at a premium price of $72.0 per share, how many shares will be reacquired? (Round the final answer to the nearest whole number.)

Reference no: EM132784699

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