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David Corporation has assets with a market value of $600 million, $80 million of which...

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Finance

  1. David Corporation has assets with a market value of $600 million, $80 million of which are cash. It has debt of $250 million, and 20 million shares outstanding. Assume perfect capital markets.
    1. The current stock price is at $26. Do you agree? Explain it with calculation. (3 marks)

  1. If David Corporation spends $70 million as a share repurchase, the share price would be increased because the number of shares would be decreased. Do you agree? Explain it with calculation (Calculate the share price after the share repurchase). (4 marks)

If David Corporation distributes $70 million as cash dividend, then what is the Ex- Dividend Price per share of the stock?

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