Good Values Inc. is all-equity-financed. The total market value of the firm currently is $100,000, and there

Question:

Good Values Inc. is all-equity-financed. The total market value of the firm currently is $100,000, and there are 2,000 shares outstanding. Ignore taxes.
a. The firm has declared a $5 per share The stock will go ex-dividend tomorrow. At what price will the stock sell today?
b. At what price will the stock sell tomorrow?
c. Now assume that the tax rate on all income is 30% and the tax rate on capital gains is zero. At what price will the stock sell, taking account of the taxation of dividends?
Now suppose that instead of paying a Good Values plans to repurchase $ 10,000 worth of stock.
d. What will be the stock price before the repurchase?
e. What will it be after the repurchase?
f. Does the existence of taxes tend to favor dividends or repurchases?
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...