BryanAir has a current period cash flow of 1.4 million and pays no dividends. The...
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Accounting
BryanAir has a current period cash flow of 1.4 million and pays no dividends. The present value of the companys future cash flows is 24 million. The company has an equity only structure; and has 760,000 shares outstanding. Assume the dividend tax rate is zero.
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What is the share price of the company's stock?
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Suppose the board of directors of the company announces its plan to pay out 50 percent of its current cash flow as cash dividends to its shareholders. Sam Johnson, who owns 1,400 shares of the company's stock, wants to achieve a zero payout policy. How many shares should he sell or buy, assuming fractions are possible?
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Discuss the imperfections that may make it impossible to achieve a homemade dividend policy.
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