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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
13.  Parnell Bolts Inc. has 20 million common shares outstanding and net income of
$30 million. The stock sells at a P/E of 15. The company has $5 million available to pay the next quarterly dividend, but is considering a repurchase instead.
a. If Parnell pays the cash dividend, what will be its dividend yield on an annual- ized basis?
b. How many shares will be redeemed if the repurchase option is chosen and the stock is acquired at market value?
c.  What will be the EPS after the repurchase if earnings remain unchanged?
d. What will be the new stock price if the P/E remains unchanged?
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