Critically evaluate Chucks suggestion of following a residual dividend policy accompanied by a repurchase of stock at

Question:

Critically evaluate Chuck’s suggestion of following a residual dividend policy accompanied by a repurchase of stock at $8 per share. What are the pros and cons of using a stock repurchase option instead of a cash dividend to distribute returns to shareholders?

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...

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