Need answer the accounting question The Carlton Corporation has $4 million in earnings after taxes and 1million shares outstanding. The stock trades at a P/E ratio of 20. Thefirm has $3 million in excess cash.a. Compute the current price of the stock.b. If the $3 million is used to pay dividends, how much will dividendsper share be?c. If the $3 million is used to repurchase shares in the market at aprice of $83 per share, how many shares will be acquired?d. What will the new earnings per share be?

Step 1:- Introduction to the Price-Earning RatioPrice-Earnings ratio (P/E Ratio) is a financial…

Answered: The Carlton Corporation has $4 million…

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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