Chapter15: Dividend Policy
Section: Chapter Questions
Problem 5P
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Question
Taco Time Corporation is evaluating an extra dividend versus a share repurchase. In either case, $22,960 would be spent. Current earnings are $3.80 per share, and the stock currently sells for $92 per share. There are 4,100 shares outstanding. Ignore taxes and other imperfections. What will the company’s EPS and PE ratio be under the two different scenarios?
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