AA Inc. is manufacturing various types of classic furniture. Currently, the operating income of the property is about RM 6 million. Meanwhile, the company has earnings available for common stockholders of RM 3 million and has 1,000,000 shares of common stock outstanding at RM 2.00 per share. AA Inc. is currently contemplating the payment of RM 3.50 per share in cash dividend. The company has a tax rate of 24%. i) Calculate the firm's current earnings per share (EPS) and price/earnings (P/E) ratio. ii) If the firm can repurchase stock at RM 2.50 per share, how many shares can be purchased under the proposed cash dividend payment? iii) How much will the EPS be after the proposed repurchase?

AA Inc. is manufacturing various types of classic furniture. Currently, the operating income of the property is about RM 6 million. Meanwhile, the company has earnings available for common stockholders of RM 3 million and has 1,000,000 shares of common stock outstanding at RM 2.00 per share. AA Inc. is currently contemplating the payment of RM 3.50 per share in cash dividend. The company has a tax rate of 24%. i) Calculate the firm's current earnings per share (EPS) and price/earnings (P/E) ratio. ii) If the firm can repurchase stock at RM 2.50 per share, how many shares can be purchased under the proposed cash dividend payment? iii) How much will the EPS be after the proposed repurchase?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 11P: The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are...

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