The Carlton Corporation has $4 million in earnings after taxes and 2 million shares outstanding. The stock trades at a P/E of 30. The firm has $1 million in excess cash. a. Compute the current price of the stock. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. If the $1 million is used to pay dividends, how much will dividends per share be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
The Carlton Corporation has $4 million in earnings after taxes and 2 million shares outstanding. The stock trades at a P/E of 30. The firm has $1 million in excess cash. a. Compute the current price of the stock. (Do not round intermediate calculations and round your answer to 2 decimal places.) b. If the $1 million is used to pay dividends, how much will dividends per share be? (Do not round intermediate calculations and round your answer to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Carlton Corporation has $4 million in
earnings after taxes and 2 million shares
outstanding. The stock trades at a P/E of 30.
The firm has $1 million in excess cash.
a. Compute the current price of the stock.
(Do not round intermediate calculations and
round
your answer to 2 decimal places.)
b. If the $1 million is used to pay dividends,
how much will dividends per share be? (Do
not round intermediate calculations and
round your answer to 2 decimal places.)
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