Dixie's Has a Market Value Balance Sheet as Shown Below

question 39

Multiple Choice

Dixie's has a market value balance sheet as shown below.The firm currently has 2,200 shares of stock outstanding and net income of $10,500. The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend.What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.

• A)14.20
• B)16.67
• C)13.08
• D)11.22
• E)14.57

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Definitions:

Elaboration

The process of adding more detail or information to something, often to clarify or enhance understanding.

Short-Term Memory

The capacity for holding, but not manipulating, a small amount of information in an active, readily available state for a short period of time.

George Miller

A cognitive psychologist best known for his work on the capacity of human memory and the theory that short-term memory is limited to about seven items.

Cowan

A surname of likely British origin, but without a clear definition of its significance in a specific field without further context.