Parfois is evaluating an extra dividend versus a share repurchase. In either case $3,000 would be spent. Current earnings are $1.50 per share, and the stock currently sells for $58 per share. There are 600 shares outstanding. Ignore taxes and other imperfections: Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. What will be the effect on American Eagle’s EPS and PE ratio under the two different scenarios?
Parfois is evaluating an extra dividend versus a share repurchase. In either case $3,000 would be spent. Current earnings are $1.50 per share, and the stock currently sells for $58 per share. There are 600 shares outstanding. Ignore taxes and other imperfections: Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. What will be the effect on American Eagle’s EPS and PE ratio under the two different scenarios?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Parfois is evaluating an extra dividend versus a share repurchase. In either case $3,000 would be spent. Current earnings are $1.50 per share, and the stock currently sells for $58 per share. There are 600 shares outstanding. Ignore taxes and other imperfections:
Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth.
What will be the effect on American Eagle’s EPS and PE ratio under the two different scenarios?
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