Question: The B. Phillips Co. Ltd. is planning to pay dividends of $550,000. There are 2,750,000 shares outstanding, with an earnings per share of 60 cents.

The B. Phillips Co. Ltd. is planning to pay dividends of $550,000. There are 2,750,000 shares outstanding, with an earnings per share of 60 cents. The shares should sell for $4.50 after the ex-dividend date. If instead of paying a dividend, management decides to repurchase shares:

(a) What should be the repurchase price?

(b) How many shares should be repurchased?

(d) If you own 100 shares, would you prefer that the company pay the dividend or repurchase shares?

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