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Week 4 FI516 - a Earnings Per Share Dividends Per Share...

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a) 2005 2010 Earnings Per Share $8,160.00 $12,000.00 Dividends Per Share $4,200.00 $6,000.00 Book Value Per Share $90,000.00 b) gEPS gDPS Kennedy 8.40% 8.40% Strasburg 6.40% 6.40% Edelman 8.00% 7.40% c) d) e) 2005 2010 Earnings Per Share $2.04 $3.00 Dividends Per Share $1.05 $1.50 Book Value Per Share $22.50 f) ROE Kennedy 15.00% Strasburg 13.64% Edelman 13.30% Payout Ratio g) 2005 2010 Kennedy 50.00% 50.00% Strasburg 50.00% 50.00% Edelman 51.47% 50.00% h) Debt to Asset Ratio Kennedy 42.86% Strasburg 36.59% Edelman 55.00% i) P/E Ratio Kennedy 8.00 Strasburg 8.67 j) EPS Multiple DPS Multiple The number of shares has inflated EPS, DPS and Book value so if they attempt to sell stoc If the stocks were split to bring the values closer to Strasburg and Kennedy and bring the
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Kennedy 8.00 16.00 Strasburg 8.67 17.33 Kennedy Strasburg Earnings $24.00 $26.00 Dividends $24.00 $26.00 Book Value $27.00 $26.55 k) Kennedy 15.18% Strasburg 12.54% Edelman based on Kennedy $21.54 Edelman based on Strasburg $33.66 l) a) Total Dollar Call Premium $4,400,000.00 Yes It is Tax Deductible After Tax Cost $2,640,000.00 b) Dollar Flotation Cost of New Issue $1,600,000.00 c) Flotation Cost, Old Issue $2,400,000.00 Already Expensed $480,000.00 Unexpensed $1,920,000.00 Tax Savings $768,000.00
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