A firm's next-period market value of equity is $2.5 million and there are 100,000 shares outstanding, with
Question:
a. What is the current stock price if the firm pays $500,000 in cash dividends?
b. What is the number of shares outstanding if a firm spends its extra $500,000 to buy back shares at $30 per share instead of paying $500,000 in cash dividends?
c. What is the current stock price if a firm spends its extra $500,000 to buy back shares at $30 per share instead of paying $500,000 in cash dividends?
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a Paying cash dividends P 0 P 1 D 1 1K 255 1015 ...View the full answer
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Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
Question Posted:
Related Video
A stock buyback is when a public company uses cash to buy shares of its own stock on the open market. A company may do this to return money to shareholders that it doesn\\\\\\\'t need to fund operations and other investments.This video will give you detailed overview about how stock buy back works and how it is useful tool for companies to raise capital .
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