In the previous problem, suppose the company has announced it is going to repurchase $38,500 worth of
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In the previous problem, suppose the company has announced it is going to repurchase $38,500 worth of stock instead of paying a dividend. What effect will this transaction have on the equity of the firm? How many shares will be outstanding? What will the price per share be after the repurchase? Ignoring tax effects, show how the share repurchase is effectively the same as a cash dividend.
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Repurchasing the shares will reduce shareholders equity by 38500 ...View the full answer
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Related Book For
Essentials Of Corporate Finance
ISBN: 9780073405131
6th Edition
Authors: Stephen A. Ross, Randolph Westerfield, Bradford D. Jordan
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