Company B?s market-value

Company B?s market-value

Company B?s market-value balance sheet is presented below. There are 1,000 shares outstanding, and each share currently sells for $20. Earnings available for common shareholders are $2000 per year. The firm will either pay a $1 per share dividend or repurchase $1000 worth of stock. (a) Calculate the price per share and price-earnings ratio under each alternative. (b) Briefly discuss why a company might prefer either a cash dividend or a stock repurchase.assets:- Cash : $2000, Other assets: $28,000Liabilites and equit:- DEbt $10,000 Equity: $20,000

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