Question: Morson Corp. will issue dividend. The dividend will be $0.5 per share, and there are 20,000 shares of stock outstanding. The firm has $10000 excess

Morson Corp. will issue dividend. The dividend will be $0.5 per share, and there are 20,000 shares of stock outstanding. The firm has $10000 excess cash, $900,000 fixed assets and 1000000 equity.

  1. What is Deserts ex-dividend price ?
  2. Suppose that instead of paying a dividend, Morson Corp announces that it will repurchase stock with a market value of $10,000. What happens to the stock price when the repurchase is announced?

Morson Corp. has regularly paid a quarterly dividend of $.50 per share on its 20,000 outstanding shares. Now suppose that Deserts announces that instead of paying this dividend, it plans to repurchase $10,000 worth of stock instead.

3) What effect will the repurchase have on an investor who currently holds 100 shares and sells 1 of those shares back to the company in the repurchase?

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