Dixie's has a market value balance sheet as shown below.The firm currently has 2,200 shares of stock outstanding and net income of $10,500. The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend.What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.
A)14.20
B)16.67
C)13.08
D)11.22
E)14.57

Question

Dixie's has a market value balance sheet as shown below.The firm currently has 2,200 shares of stock outstanding and net income of $10,500.  The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend.What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.
A)14.20 
B)16.67 
C)13.08 
D)11.22 
E)14.57

Quizplus · Accepted Answer

The Answer of Dixie's has a market value balance sheet as shown below.The firm currently has 2,200 shares of stock outstanding and net income of $10,500.  The firm has decided to spend $6,500 on new equipment and use the remaining excess cash to pay an extra cash dividend.What will the firm's PE ratio be after this dividend is paid, all else held constant? Ignore taxes.
A)14.20 
B)16.67 
C)13.08 
D)11.22 
E)14.57

Dixie's Has a Market Value Balance Sheet as Shown Below