Tangshan Mining Company Has Released the Following Information

question 106

Essay

Tangshan Mining Company has released the following information. (a) What are Tangshan Mining's current earnings per share?
(b) What is Tangshan Mining's current P/E ratio?
(c) Tangshan Mining wants to use half of its earnings either to pay shareholders dividends or to repurchase shares for inclusion in the firm's employee stock ownership plan. If the firm pays a cash dividend, what will be the dividend per share received by existing shareholders?
(d) Instead of paying the cash dividend, what if the firm uses half of its earnings to pay $55 per share to repurchase the shares, what will be the firm's new EPS? What should be the firm's new share price?
(e) Compare the impact of a stock dividend and stock repurchase on shareholder wealth.

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Definitions:

Prefrontal Cortex

The part of the brain located at the front of the frontal lobe, associated with complex cognitive behavior, personality expression, decision making, and moderating social behavior.

Negative Emotions

Feelings that are generally perceived as unpleasant, such as sadness, anger, and fear, influencing both thought processes and behavior.

Electrically Active

Describes cells or components that respond to or produce electrical signals.

Sexual Arousal

The physiological and psychological state of being sexually stimulated, often leading to the desire for sexual activity.