The stock of Level Corp. will go ex-dividend tomorrow. The dividend will be $1 per...
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| The stock of Level Corp. will go ex-dividend tomorrow. The dividend will be $1 per share, and there are 15,000 shares of stock outstanding. The market-value balance sheet for Level is shown below. |
| Assets | Liabilities and Equity | ||
| Cash | $100,000 | Equity | $900,000 |
| Fixed assets | 800,000 | ||
| Suppose that Level changes its mind and decides to issue a 5% stock dividend instead of either issuing the cash dividend or repurchasing 5% of the outstanding stock. How would this action affect a shareholder who owns 240 shares of stock? (Round your answers to the nearest dollar.) |
| Total value of the position | $ | |
| Compare the effects of the repurchase to the effects of the cash dividend. |
| The value of the position is ,the same as, higher than or lower than under the cash dividend? |
| Compare the effects of the repurchase to the effects of repurchasing 5% of the outstanding stock. |
| The value of the position is the same as, higher than, or lower than under the repurchase? |
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