Flemington Farms Is Evaluating an Extra Dividend Versus a Share

question 10

Multiple Choice

Flemington Farms is evaluating an extra dividend versus a share repurchase.In either case,$15,000 would be spent.Current earnings are $2.80 per share,and the stock currently sells for $75 per share.There are 2,800 shares outstanding.Ignore taxes and other imperfections.The PE ratio will be ____ if the firm issues the dividend as compared to ____ if the firm does the share repurchase.

• A)24.87; 24.87
• B)24.87; 26.79
• C)26.79; 24.87
• D)26.79; 26.79
• E)26.79; 27.13

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