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Haywood and More: PE Ratio after extra cash dividend

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20. Haywood and More have a market value balance sheet as shown below. The firm currently has 5,000 shares of stock outstanding at a market price per share of $35.40. Net income is $9,500.

market value balance sheet
excess cash $8000 debt 0
other assets $203,000 equity $211,000
total $211,000 total $211,000

The firm has decided to spend $8,000 and pay an extra cash dividend. What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.

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Solution Summary

The expert examines the PE ratio after extra cash dividends for Haywood and More.

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PE ratio = Price per share / Earnings per share

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