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instructors may want to give clues to help the students. There is also an interesting side issue related to
the repurchase of shares in the open market, and the associated impact on earnings per share and stock
price. Executive stock options are also included in the analysis.
Relation to Text: This case should follow Chapter 18.
Complexity: The case is moderately complex. It should require 45 minutes. 94 Solutions
1. If the student properly analyzes the financial statements, he or she will see there is no need to reduce
the cash dividend.
The dividend payout ratio is relatively high at 61.3% ($.65 dividends per share/$1.06 earnings per
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