A firm s next period market value of equity is 2 5 million
A firm's next-period market value of equity is $2.5 million and there are 100,000 shares outstanding, with K = 15%.
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?

Membership TRY NOW
  • Access to 800,000+ Textbook Solutions
  • Ask any question from 24/7 available
    Tutors
  • Live Video Consultation with Tutors
  • 50,000+ Answers by Tutors
OR
Relevant Tutors available to help