Problem 14.12 – Taco Time Extra Dividend or Share Repurchase

Essentials of Corporate Finance

Ross, Westerfield, and Jordan

10th Edition and 11th Edition

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Taco Time Corporation is considering either an extra dividend or a share repurchase, Given the shares outstanding, current earnings per share, and stock price, compare the effects on the price per share of the stock and shareholder wealth for the two options, and evaluate the effects on the company's EPS and PE ratio. Determine the EPS and PE Ratio with an extra dividend and with a share repurchase.

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