Kelso's Is Considering Spending $80,000 on Either a Stock Repurchase

question 43

Multiple Choice

Kelso's is considering spending $80,000 on either a stock repurchase or an extra cash dividend.Which one of the following values will be the same whether the firm pays a dividend or repurchases stock? Assume there are no taxes or market imperfections.

• A)Number of shares outstanding
• B)Price per share
• C)Earnings per share
• D)Price-earnings (PE) ratio
• E)Market value of equity per share

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Definitions:

Paying Customer

An individual or entity that purchases goods or services, contributing to a business's revenue.

Frequent Flyer

A loyalty program member who travels regularly with a particular airline and earns points or miles that can be redeemed for travel-related benefits.

Total Capacity

The maximum output or production level that a facility, system, or organization can achieve under normal conditions.

Overbooked

The state of accepting more reservations or commitments than the available capacity can accommodate.