Built Rite Corp

Built Rite Corp. is evaluating an extra dividend versus a share repurchase. In either case, $7,500 would be spent. Current earnings are $1.24 per share, and the stock currently sells for $32 per share. There are 5,000 shares outstanding. Ignore taxes and other imperfections. You own one share of stock in this company. If the company issues the dividend, your total investment will be worth ________ as compared to ________ if the company opts for a share repurchase.

A) $30.50; $30.50
B) $27.50; $32.00
C) $27.50; $30.50
D) $27.50; $27.50
E) $32.00; $32.00

Correct Answer:

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