ebon Status 10 points Sa QUESTION 5 Explain why the capital structure of a firm

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ebon Status 10 points Sa QUESTION 5 Explain why the capital structure of a firm is irrelevant to equity investors T T | ? Paragraph v Arial 3(12pt, v :-. I-. T v HTHL Words 0 QUESTION 6 10 points Save Ans Flemington Farms is evaluating an extra dividend versus a share repurchase. In either case, $15,000 would be spent. Current eamings 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 PEratio wil be--if the firm issues the dividend as compared to if the firm does Click Save and Submit to save and subrt,Click Save All Ansvers to save all ansuers Save All Answers Save and Subm O Type here to search

Explanation / Answer

Flemington Farms Amount Spent $ 15,000.00 Current Earnings per share $            2.80 Market Price Per Share $         75.00 Number of shares outstandings 2800 Stock Dividend per share=($15000/2800) $            5.36 Share Price=($75-5.35) $         69.64 Price Earnings Rario=Market Price per shre/Earnings per share Price Earnings Ratio=($69.64/2.8) $         24.87 Stock Repurchase=($15000/$75) 200 Net Income=(2800*2.8) $   7,840.00 Shares after repurchase=(2800-200) $   2,600.00 EPS=$7840/2600 $            3.02 Price Earnings ratio=($75/3.105) $         24.87 The Price earning ratio is $24.87 when dividend issue and $24.87 when shares repurchsed.

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