The balance sheet for Throwing Copper, Inc., is shown here in market value terms. There are 23,000 shares outstanding.

Cash Fixed assets Total

Market Value Balance Sheet $160,000 Equity $724,500

564,500 $724,500 Total $724,500

b) Suppose that the company has announced it is going to repurchase $31,050 worth of stock instead of paying a dividend. What effect will this transaction have on the equity of the firm? How many shares will be outstanding? What will the price per share be after the repurchase? Ignoring tax effects, show how the share repurchase is effectively the same as a cash dividend.

c) Suppose that instead of a cash dividend or share repurchase, the company declares 5% stock dividend. The stock goes ex-dividend tomorrow. What will be the ex-dividend price? What will be the effect of the stock dividend on the companys market value?