If the firm repurchases shares

Assignment Help Financial Management

Reference no: EM131507382

A firm is debating whether or not to conduct a share repurchase or pay a special dividend with $11,000 cash. Current EPS is $1.40 per share, and the 2,000 shares outstanding currently sell for $58 each. You own exactly 1 share.

a) If the firm makes the special dividend payment, what will your total wealth be?

b) If the firm repurchases shares, how many shares will be repurchased, and what will your total wealth be?

c) If the firm makes the special dividend payment, what will the P/E ratio be?

d) If the firm repurchases shares, what will the new EPS be?

Reference no: EM131507382

Questions Cloud

Calculate the duration gap at the time of purchase : Calculate the duration gap at the time of purchase. Does this bond at purchase entail the risk of higher or lower interest rates?

Explain the various degrees of dependency : A firm is considering a capital investment. The risk premium is 0.04, and it is considered to be constant through time.

How are faults hypocenters and epicenters related : How are faults, hypocenters, and epicenters related? Faults that are experiencing no active creep may be considered "safe"

Compare before-tax equivalent annual costs : Work Problem by comparing after-tax equivalent PWs if the effective income tax rate is 40%, the present book value is $5,000, and the depreciation charge is $1.

If the firm repurchases shares : If the firm repurchases shares, how many shares will be repurchased, and what will your total wealth be?

Analyze the cost justification strategies : Analyze the cost justification strategies that you will use to justify the cost of the HRIS, including data that identify each benefit.

Globalization of culture shaped places : How has globalization of culture shaped places or landscapes?

Standard money demand function : A standard 'money demand' function used by macroeconomists has the form ln(m) =ß0+ß1 ln(GDP) +ß2R.

After-tax component cost of debt for the firm : Estimate the before-tax and after-tax component cost of debt for the firm.

User Account

All Pages