6. Dividends, repurchases, and firm value Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm's intrinsic value. It is thus important to understand the impact of distributions-both in the form of dividends or stock repurchases-on the firm's value. Consider the following situation: Tamya is a financial analyst in Demo You Inc. As part of her analysis of the annual distribution policy and its impact on the firm's value, she makes the following calculations and observations: - The company generated a free cash flow (FCF) of $132 milion in its most recent fiscal vear. - The firm's cost of capital (WACC) is 15%. The firm has been growing at 6\%w for the past six years but is expected to grow at a constant rate of 5%y in the future. - The firm has 33.00 million shares outstanding. - The company has $352 million in debt and 5220 milion in preferred stocki. Along with the rest of the finance tearm, Tanya has been part of board meetings and knows that the company is planning to distribute 575 milion, which is invested in short-term investments, to ita shareholders by buying back atock, from its shareholders. Tanya also obcerved that, at this point, apart from the 575 milis on in short-term investments, the firm has no other nonoperating assets. Eased on your understanding of stock repurchases, identify whether the following statemeet is trun or false: If a firm pays a dividend of 40.59 per share, the firmis stock prike wal also fall br 10.39 per share. This statement is because if a firm pays a dividend of $0.59 per share, the price per share of the firm's thock will also fall by so.50 to any arbitrage opportunities