Need help with past exam paper pay out policy question. ...
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Accounting
Need help with past exam paper pay out policy question.
Question 2 Payout Policy (8 marks) NHK Lid plans to distribute all of its earnings (100% payout ratio) in the previous year through cash dividends or share repurchases. This payment will not influence the profitability (i.. ROE) of the firm. Assume a perfect capital market (i..., no tax, no transaction cost, symmetric information, etc.) and share price is determined by the constant growth model. Indicate how cash dividend and share repurchase may influence (Increase, Decrease, Unchanged the values in the following table (the change in the value immediately after the payment is made). Share repurchase Cash dividend Share price Number of shares Earnings per share (EPS) Price/EPS (P/E)
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