Final answer:
Issuing $100 in dividends drops the company's equity value by $100 and could increase the P/E multiple if earnings stay the same.
Step-by-step explanation:
Issuing $100 in dividends reduces a company's equity value by that amount. Since equity value underpins the Price to Earnings (P/E) ratio, a lower equity value would potentially increase the P/E multiple if earnings remain unchanged. However, this scenario simplifies the dynamics of market reactions since investors often view dividends favorably, which can influence a company's stock price positively and affect the P/E ratio in complex ways.