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Wk12 Q10 Stock Repurchase Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case, $9,000 would be spent....
Wk12 Q10 Stock Repurchase Flychucker Corporation is evaluating an extra dividend versus a share repurchase. In either case, $9,000 would be spent. Current earnings are $1.30 per share, and the stock currently sells for $64 per share. There are 1,000 shares outstanding. Ignore taxes and other imperfections in answering the first two questions.Required:(a) Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth. The cash dividend will be $ ___per share. The wealth of a shareholder who is holding one share is $___. With the share repurchase, the company would repurchase shares. If you choose to let your share be repurchased, you would have $___ in cash. If you keep your share, they are worth $___. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))(b) Flychucker's EPS and PE ratios if it pays a cash dividend will be $___ and ___, respectively. If Flychucker repurchases stock instead, the EPS and PE ratios will be $ __and___, respectively. (Do not include the dollar signs ($). Round your answers to 2 decimal places. (e.g., 32.16))
