Question: Please answer parts a and b and explain each step. IS. Stock Repurchases. Payout Corp. has regularly paid a quarterly dividend of $.50 per share

Please answer parts a and b and explain each step. IS.

Please answer parts a and b and explain each step.

IS. Stock Repurchases. Payout Corp. has regularly paid a quarterly dividend of $.50 per share on its 20,000 outstanding shares. Now suppose that Payout announees that instead of paying this dividend it plans to repurchase $10,000 worth of stock instead. [LGIFI) a. What effect will the repurchase have on an investor who currently holds 100 shares and sells 1 of those shares hack to the company in the repurchase? h. Compare the effects of the repurchase to the effects of the cash dividend that you worked out in Problem 5

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