ABC Ltd has a market capitalization of 1 billion. It has 100 million in cash and the
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ABC Ltd has a market capitalization of ₹1 billion. It has ₹100 million in cash and the balance
₹900 million in other assets. There are 10 million shares outstanding, each valued at ₹100.
What will be the impact on ABC’s stock price and the wealth of its shareholders of each of the following decisions? Consider each decision separately.
a. The company pays a cash dividend of ₹10 per share.
b. The company repurchases 1 million shares.
c. The company pays a 10 per cent stock dividend.
d. The company has a two-for-one stock split.
e. The company invests ₹100 million in a project whose returns are equal to the firm’s cost of capital.
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Related Book For
Corporate Finance Theory And Practice In Emerging Economies
ISBN: 9781108486965
1st Edition
Authors: Sunil Mahajan
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