Question: Squeeze Co is currently deciding on the level and form of its next dividend.It is considering three options: i. A cash dividend payment of 15p

Squeeze Co is currently deciding on the level and form of its next dividend.It is considering three

options:

i. A cash dividend payment of 15p per share

ii. A 5% scrip dividend

iii. A repurchase of 15 % of ordinary share capital at the current market price

Extracts form the company's financial statements are given below

mm

Operating profit24.5

Taxation7.8

Distributable earnings16.7

Non-current assets75

Current Assets

Trade receivables27

Inventory24

Cash4697

Total Assets172

Equity Finance

Ordinary Shares (50p)26

Reserves108134

Current Liabilities38

Total liabilities172

a) If the current cum dividend share price is 432p, calculate the

effect of the three options on the wealth of a shareholder owning

1250 shares in Squeeze Co.

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