Suppose Microsoft has 8.75 billion shares outstanding and pays a marginal corporate tax rate of 21%. If
Question:
Suppose Microsoft has 8.75 billion shares outstanding and pays a marginal corporate tax rate of 21%. If Microsoft announces that it will pay out $50 billion in cash to investors through a combination of a special dividend and a share repurchase, and if investors had previously assumed Microsoft would retain this excess cash permanently, by how much will Microsoft’s share price change upon the announcement?
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Constant Growth Dividend Discount Model – This dividend discount model assumes dividends grow at a fixed percentage. They are not variable and are consistent throughout. Variable Growth Dividend Discount Model or Non-Constant Growth model
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