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Question: The Cooper Corporation has $10,000,000 in earnings after taxes and 2,000,000 shares outstanding. Shares are currently trading at a P/E of 12. Cooper has $6,000,000 in excess cash available to return to investors.

a. What is the current price of the stock?

b. If the cash is used to pay a dividend, how much would the dividend be per share be? And what is the dividend yield?

c. If instead Cooper uses the cash to buy back shares at a premium of 63 per share, how many shares could be repurchased? And what is the new EPS?

d. If the cash was used to repurchase shares and the P/E ratio remains constant, what is the new market price of the shares?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92800342

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