Apex Industries is considering either an extra dividend or a share repurchase, spending $20,000 either way. Current earnings are $2.50 per share, and the stock currently sells for $75 per share. There are 4,000 shares outstanding. Ignore taxes and other market imperfections. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share.

Apex Industries is considering either an extra dividend or a share repurchase, spending $20,000 either way. Current earnings are $2.50 per share, and the stock currently sells for $75 per share. There are 4,000 shares outstanding. Ignore taxes and other market imperfections. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 9MC

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ed Erna Corporation is evaluating an extra dividend versus a share repurchase. In either case, $53,500 would be spent. Current earnings are $1.79 per share, and the stock currently sells for $64 per share. There are 9,000 shares outstanding. Ignore taxes and other imperfections. a. Evaluate the two alternatives in terms of the effect on the price per share of the stock and shareholder wealth per share. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. What will the company's EPS and PE ratio be under the two different scenarios? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
please help i cant fogure what im doing wrong for the last question
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