Prasarana Company has released the following information. Earnings available to common stockholders RM 5,000,000 Number of shares of common stock outstanding 1,000,000 Market price per share RM 50 Retained earnings 11,600,000 Rather than paying the cash dividend, what if the firm uses half of its earnings to pay RM55 per share to repurchase the shares, what will be the firm's new EPS? What should be the firm's new share price?

Prasarana Company has released the following information. Earnings available to common stockholders RM 5,000,000 Number of shares of common stock outstanding 1,000,000 Market price per share RM 50 Retained earnings 11,600,000 Rather than paying the cash dividend, what if the firm uses half of its earnings to pay RM55 per share to repurchase the shares, what will be the firm's new EPS? What should be the firm's new share price?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 12P

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Earnings available to common stockholders	RM 5,000,000
Number of shares of common stock outstanding	1,000,000
Market price per share	RM 50
Retained earnings	11,600,000