What will be the effect on the company eps and pe ratio

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Reference no: EM133331559

Question: Dragonne is trying to choose between an additional dividend and the repurchase of shares. In both cases, you would have to spend $2,500. Current benefits are $0.80 per share, and the shares are currently trading at $30 per unit. 150 ago outstanding shares. Disregard taxes and other imperfections to answer the first two questions.

a) Evaluate the two options based on their effect on the price per share and the shareholder wealth.

b) What will be the effect on the company's EPS and P/E ratio with each of these options?

c) In the real world, which of these actions would be preferable? Justify your answer.

Reference no: EM133331559

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