QUESTION 7There are 100,000 shares outstanding. The total market value of the equity is $1 million,so the stock sells for $10 per share. Eamings per share (EPS) are $49,000/100,000 = $.49,and the price-eamings ratio (PE) is $10/$.49 = 20.4.One option the company is considering is a $300,000/100,000 = $3 per share extracash dividend. Altematively, the company is thinking of using the money to repurchaseshares of stockO 1.10,000O2.20.0000 3.30,000O 4.300,000

Given÷ Total no. of shares = 100000 Price per share = $ 10 Amount to be disbursed = $ 300000

Answered: QUESTION 7 There are 100,000 shares…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please fast answer. Your company is considering an issue of preference shares. The market is currently expecting a return of 7 percent and your company expects earnings per share to be $10.10 and the dividend for preferenceshares to be $1.40. i) What will be the issue price of a preference share? $20
A preferred stock pays a 3% dividend yield on a redemption value of $40, what is its value using a cost of equity of 2.5%? What is the value if the cost of equity goes up 100 basis points? 9.
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Jiffy Wax Corp. can sell common stock for $ 15 per share and its investors require a 14% return. However, the administrative or flotation costs associated with selling the stock amount to $ 2.40 per share. What is the cost of capital for Jiffy Wax if the corporation raises money by selling common stock? Select one: a. 14.00% b. 21.50% C 30.00% d. 16.67%
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Give typing answer with explanation and conclusion The XYZ Corporation stock currently sells for $52/share. The premium for a put option expiring in four weeks is $2.07. Suppose you buy 5 contracts of this put option. What is your maximum gain? (Hint: One option is called a contract, and each contract represents 100 shares of the underlying stock. Exchanges quote options prices in terms of the per-share price, not the total price an investor pays to own the contract.) A) $22,715 B) $26,000 C) $24,965 D) $23,750
Problem 2. You open a 1000 share short position in Happy Bunny Inc. common stock at the bid-ask price spread of $32.00 - $32.50. When you close your position the bid-ask prices are $30.25 – $30.50. Happy Bunny Inc. common stock paid a cash dividend in the amoount of $0.20 per share while you held the short position. If you pay a commission of $10 per trade, and interest rates are zero, calculate your profit or loss on the investment position?
9. The group company markets two shares for two different companies at a price of $50 per share, one of the two shares is undervalued by $5 and the other is overvalued by $1, but you have no way of knowing which of the two shares is overvalued and which of the two shares is undervalued the Actual. You plan to buy 2,000 shares of each issue. If the issue is priced below the actual price, it would make sense that only half of the required stock would be sold out. If you were able to buy 2,000 shares of each company what would your profit be? And what profit did you actually expect? What is the principle that you Explain it
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