Flemington Farms is evaluating an extra dividend versus a share repurchase.In either case,$15,000 would be spent.Current earnings 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 PE ratio will be ____ if the firm issues the dividend as compared to ____ if the firm does the share repurchase.

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If the firm issues the dividend:$15,000/2,800 shares = $5.36 dividends per share($75 - $5.36)/2,800 shares = $24.87 P/E ratioIf the firm does the share repurchase:$15,000/$75 = 200 shares repurchased$2.80 * 2,800 = $7,840 earnings$7,840/(2,800 - 200 shares repurchased) = $3.0154 earnings per share after repurchase$75/$3.0154 earnings per share = 24.87.

Flemington Farms Is Evaluating an Extra Dividend Versus a Share