Repurchase of Stock
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Company c is planning to pay dividends of $550,000. There are 275,000 shares outstanding, with an earnings per share of $6. The stock should sell for $45 after the tax ex-dividend date. if instead of paying a dividend, management decides to repurchase the stock:
1. What should be the repurchase price?
2. How many shares should be repurchased?
3. What if the repurchase price is set below or above the suggested price, part A.
4. If you own 100 shares, would you prefer that the company pay the dividend, or repurchase the stock?
What I need help with is the formula and run down of the process to figure out this problem, the explicit answer is not necessary
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Answers questions on repurchase of stock.
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Company c is planning to pay dividends of $550,000. There are 275,000 shares outstanding, with an earnings per share of $6. The stock should sell for $45 after the tax ex-dividend date. if instead of paying a dividend, management decides to repurchase the stock:
1. What should be the repurchase price?
Dividends= $550,000
Number of shares= 275,000
Therefore, dividend per share= $2.00 =550000/275000
Ex ...
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