Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. the company has paid a constant cash dividend of 7

The company has paid a constant cash dividend of 7$ on an annual basis for...

60.1K

Verified Solution

Question

Finance

The company has paid a constant cash dividend of 7$ on an annual basis for the last decade. For the dividend payment it used all its earnings. The business outlook is stable with no growth. Currently there are 250.000 outstanding shares at 50$ per share. The company earned again just about the right amount to pay its dividend. The CFO decides to switch instantly from cash dividends to repurchases for this year (T0). Project and compare the stock price for the old and the new policy for next year (T1). (10 marks)

Do the necessary calculations and fill the following table:

New Policy

Old Policy

Shares oustanding

Shares Repurchased

Share Price

Share Price

T0

T1

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Biology
1.2K views

Describe three ways to tell if a specific neurotransmitter is synthesized and stored in a particular...

Chemistry
1.2K views

When doing Paper Chromatography, 1.What would you expect to see if the paper had been touched...

Physics
1.2K views

A brass ring of diameter 10.00 cm at 16.4°C is heated and slipped over an aluminum...

Biology
1.2K views

5. Prompt- How do plants and animals rely on one another to live? (need help?...

Physics
1.2K views

39 A small square loop of wire of side I is placed inside a large...

Basic Math
1.2K views

The following are sample prices of houses in a particular neighborhood.Data (in thousands of dollars):...

Algebra
1.2K views

We want to graph the function f x log4 x In a table below find...

Algebra
1.2K views

The table gives the values of a function obtained from an experiment Use them to...

Algebra
1.2K views

Use properties of logarithms to find the exact value of each expression Do not use...

Accounting
1.2K views

Critically discuss the literature on the conditions necessary for the development of the mortgage market...

Accounting
1.2K views

Question #4: Investment & Insurance Planning. You are 40 years old (very successful in your...

Finance
1.2K views

3) A) The bottom right area of the BCG growth-share matrix (here "A") is called...