Stock repurchase Harte Textiles, Inc., a maker of custom upholstery fabrics, is concerned about preserving the wealth of its stockholders during a cyclic downturn in the home furnishings business. The company has maintained a constant dividend payout of $3.00 tied to a target payout ratio of 40%. Management is preparing a share repurchase recommendation to present to the firm's board of directors. The following data have been gathered from the last two years: a. How many shares should the company have outstanding in 2022 if its earnings available for common stockholders in that year are $1,700,000 and it pays a dividend of $3.00, given that its desired payout ratio is 40%? b. How many shares would Harte have to repurchase to have the level of shares outstanding calculated in part a? a. The number of shares the company should have outstanding is shares. (Round to the nearest whole number.)
Stock repurchase Harte Textiles, Inc., a maker of custom upholstery fabrics, is concerned about preserving the wealth of its stockholders during a cyclic downturn in the home furnishings business. The company has maintained a constant dividend payout of $3.00 tied to a target payout ratio of 40%. Management is preparing a share repurchase recommendation to present to the firm's board of directors. The following data have been gathered from the last two years: a. How many shares should the company have outstanding in 2022 if its earnings available for common stockholders in that year are $1,700,000 and it pays a dividend of $3.00, given that its desired payout ratio is 40%? b. How many shares would Harte have to repurchase to have the level of shares outstanding calculated in part a? a. The number of shares the company should have outstanding is shares. (Round to the nearest whole number.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Stock repurchase Harte Textiles, Inc., a maker of custom upholstery fabrics, is concerned about preserving the wealth of its stockholders during a cyclic downturn in the home furnishings
business. The company has maintained a constant dividend payout of $3.00 tied to a target payout ratio of 40%. Management is preparing a share repurchase recommendation to present to
the firm's board of directors.
The following data have been gathered from the last two years:
a. How many shares should the company have outstanding in 2022 if its earnings available for common stockholders in that year are $1,700,000 and it pays a dividend of $3.00, given that
its desired payout ratio is 40%?
b. How many shares would Harte have to repurchase to have the level of shares outstanding calculated in part a?
a. The number of shares the company should have outstanding is
shares. (Round to the nearest whole number.)
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