Question: Hors dAge Cheeseworks has been paying a regular cash dividend of $4 per share each year for over a decade. The company is paying out

Hors d’Age Cheeseworks has been paying a regular cash dividend of $4 per share each year for over a decade. The company is paying out all its earnings as dividends and is not expected to grow. There are 100,000 shares outstanding selling for $80 per share. The company has sufficient cash on hand to pay the next annual dividend. Suppose that Hors d’Age decides to cut its cash dividend to zero and announces that it will repurchase shares instead.

(a) What is the immediate stock price reaction? Ignore taxes, and assume that the repurchase program conveys no information about operating profitability or business risk.

(b) How many shares will Hors d’Age purchase?

Step by Step Solution

★★★★★

3.33 Rating (171 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a If we ignore taxes and there is no information conveyed by the repurchase when the repurchase prog... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

35-B-C-F-D-P (9).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

A firm has been paying a print shop $18.500 annually to print the company's monthly newsletter. The agreement with this print shop has now expired, but it should be renewed for another five years....

Company Share Prices and Intentions to Repurchase Shares Your friend has thought about repurchases of common stock by the issuing company and has concluded that this is unethical. Specifically, this...

A company has 2,000 shares of $1 par value common stock and 200 shares of 5%, $110 par, noncumulative preferred stock outstanding. The balance in Retained Earnings at the beginning of the year was...

Hors dAge Cheeseworks has been paying a regular cash dividend of $4.30 per share each year for over a decade. The company is paying out all its earnings as dividends and is not expected to grow....

I have included the question and answer provided by my lecturer. The only part I don't understand is part (c). I am more or less able to follow the answer except for the very start of the answer to...

Hors d'Age Cheeseworks has been paying a regular cash dividend of $12 per share each year for more than a decade. The company is paying out all its earnings as dividends and is not expected to grow....

Hors d'Age Cheeseworks has been paying a regular cash dividend of $5.04 per share each year for over a decade. The company is paying out all its earnings as dividends and is not expected to grow....

Please answer New Policy for year 2 and 3. So the 2 blanks please. The rest of the answers are correct. Hors d'Age Cheeseworks has been paying a regular cash dividend of $4.80 per share each year for...

part c Hors d'Age Cheeseworks has been paying a regular cash dividend of $3.50 per share each year for over a decade. The company is paying out all its earnings as dividends and is not expected to...

Hors d'Age Cheeseworks has been paying a regular cash dividend of $3.50 per share each year for over a decade. The company is paying out all its earnings as dividends and is not expected to grow....

Show that : (1) ( divides .) (2) If and are integers with and , then . (3) If and are integers and if and , then . (4) If and are integers with , then for every positive integer .

Assess this statement from Mark Forkner, Boeings chief test pilot: There will be no simulator training required for Max pilots. Boeing will not allow that to happen. He said MCAS should be removed...

Assuming Jay and JoAnn have a business that they run as a regular corporation, prepare their joint Federal income tax return for 2 0 2 4 . They each received a W - 2 from the business which is...

Karakomi Cameras Inc. has a Disposables Division that produces a camera that sells for $15.00 per unit in the open market. The cost of the product is $13.10 (variable manufacturing of $5.00, plus...

1. Fashion Trends, Inc., a regional fashion apparel retailer, wants to prepare a 2018 Pro Forma Income Statement and a 2018 Balance Sheet using the following 2017 and 2016 data: Fashion Trends, Inc....

The following rates were observed for a first-order, irreversible reaction, carried out on a spherical catalyst: dp = 0.625 cm robs=0.09 mol/gcat.hr dp = 0.10 cm Tobs = 0.275 mol/gcat.hr Strong...

Michael and Jeanette Boyds Tax Return Michael D. and Jeanette S. Boyd live with their family at the Rock Glen House Bed & Breakfast, which Michael operates. The Bed & Breakfast (B&B) is...

Lockhart&Stark, a VC firm, has invested $ 3 million for 30% of the company, Banana. Palm, a leader in the same industry with Banana, is considering to acquire Banana. Answer the questions in the...

Explain the nonrecognition provisions available on the involuntary conversion of property.

Use the Beyond the Page feature to access the Excel program for calculating the profitability of the Nodhead project. Now suppose that the cash flows from Nodhead's new supermarket are as follows: a....

Column (A) in Table 13.1 shows the monthly return on the British FTSE 100 index from June 2013 through January 2015. Columns (B) and (C) show returns on the stocks of two firms-Executive Cheese and...

True or false? a. Most managers tend to be overconfident. b. Psychologists have found that, once people have suffered a loss, they are more relaxed about the possibility of incurring further losses....

I need answer if this question please A random sample of n = 19 items is taken, resulting in a sample mean of a - 19.0 with a sample standard deviation of s = 4.5. Assume x is normally distributed...

Jones Calculation Jones answer Ratio Formula 1 Profit Margin NI/SIS 2 ROA NI/Tot Ast 3 ROE NI/Equity 4 A/R Turn Credit Sis/AR 5 Avg. Col. Per AR/Avg. Daily Cr. Sis 6 Inv. Tum Sis/Inv 7 Fx Asset Turn...

To calculate the number of years until maturity, assume that it is currently May 2010. Rate Maturity Bid Asked Chg Ask Mo/Yr Yld ?? 16-May 106:14:00 106:18:00 2 4.98 6.5 24-May 108:13:00 108:15:00 4...