a. Compute the current price of the stock.
b. If the $3 million is used to pay dividends, how much will dividends per share be?
c. If the $3 million is used to repurchase shares in the market at a price of $83 per share, how many shares will be acquired? (Round to the nearest share.)
d. What will the new earnings per share be? (Round to two places to the right of the decimal.)
e. If the P/E ratio remains constant, what will the price of the securities be? By how much, in terms of dollars, did the repurchase increase the stock price?© BrainMass Inc. brainmass.com October 24, 2018, 9:08 pm ad1c9bdddf
XYZ Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E ratio of 20. The firm has $3 million in excess cash.
A. Compute the current price of the stock.
Earnings per share = $4 million/1 million share outstanding = $4 per share
P/E ratio = ...
This solution is comprised of a detailed calculation to find the current price of stock, dividends per share, and earnings per share.
Memorandum: In a memo to your new assistant.
You have recently hired a new assistant, Sally Jones, who previously worked in a financial accounting office preparing journal entries and financial statements. While your new assistant has experience with and fully understands financial accounting, she has no experience with managerial accounting.
In a memo to your new assistant, Sally Jones, explain to her the similarities and differences between financial and managerial accounting. Provide examples of managerial accounting reports she could expect to see within SAC, and explain how management might use the information to make decisions.View Full Posting Details