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## d. If total earnings of the firm are \$32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.) e. If total earnings of the firm are \$32,300 a year, find the price-earnings ratio if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 2 decimal places.) f. If total earnings of the firm are \$32,300 a year, find the price-earnings ratio if the firm repurchases stock.

Big Industries has the following market-value balance sheet. The stock currently sells for \$20 a share, and there are 1,300 shares outstanding. The firm will either pay a \$1 per share dividend or repurchase \$1,300 worth of stock. Ignore taxes.

 Assets Liabilities and Equity Cash \$ 8,000 Debt \$ 11,500 Fixed assets 29,500 Equity 26,000

a. What will be the subsequent price per share if the firm pays a dividend?

b. What will be the subsequent price per share if the firm repurchases stock? (Round your answer to the nearest dollar.)

c. If total earnings of the firm are \$32,300 a year, find earnings per share if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 3 decimal places.)

d. If total earnings of the firm are \$32,300 a year, now find earnings per share if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 3 decimal places.)

e. If total earnings of the firm are \$32,300 a year, find the price-earnings ratio if the firm pays a dividend. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

f. If total earnings of the firm are \$32,300 a year, find the price-earnings ratio if the firm repurchases stock. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

g. Adherents of the “dividends-are-good” school sometimes point to the fact that stocks with high dividend payout ratios tend to sell at above-average price-earnings multiples. Is Big Industries’ P/E ratio higher if it pays a dividend

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