Wells fargo is paying a dividend of $1.09 per share today. There are 225,000 shares outstanding with a market price of $31.17 per share prior to the dividend payment. Ignore taxes. Before the dividend, the company had earnings per share of $2.11. As a result of this dividend, the: A.) price-earnings ratio will be 14.26. B.) Earnings per share will increase to $3.20. C.) total value of the company will not change D.) retained earnings will increase by $245,250 E.) retained earnings will decrease by $225,000.
Wells fargo is paying a dividend of $1.09 per share today. There are 225,000 shares outstanding with a market price of $31.17 per share prior to the dividend payment. Ignore taxes. Before the dividend, the company had earnings per share of $2.11. As a result of this dividend, the: A.) price-earnings ratio will be 14.26. B.) Earnings per share will increase to $3.20. C.) total value of the company will not change D.) retained earnings will increase by $245,250 E.) retained earnings will decrease by $225,000.
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
Problem 1PS
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Wells fargo is paying a dividend of $1.09 per share today. There are 225,000 shares outstanding with a market price of $31.17 per share prior to the dividend payment. Ignore taxes. Before the dividend, the company had earnings per share of $2.11. As a result of this dividend, the: A.) price-earnings ratio will be 14.26. B.) Earnings per share will increase to $3.20. C.) total value of the company will not change D.)
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