i need part d,e, and f Good Values Inc. is all-equity-financed. The total market value of the firm currently is $140,000, and there are 4,000 sharesoutstanding. Ignore taxes.a. The firm has declared a $5 per share dividend. The stock will go ex-dividend tomorrow. At what price will the stock sell today?b. At what price will the stock sell tomorrow?c. Now assume that the tax rate on all dividend income is 30% and the tax rate on capital gains is zero. At what price will the stock selltoday, taking account of the taxation of dividends? (Do not round intermediate calculations. Round your answer to 2 decimalplaces.)d. Now suppose that instead of paying a dividend, Good Values plans to repurchase $14,000 worth of stock. What will be the stockprice before the repurchase?e. What will it be after the repurchase?f. Does the existence of taxes tend to favor dividends or repurchases?X Answer is not complete.Stock price$35 Vа.b.Stock price$30 Oc.Stock price$33.50 Vd.Stock price$32 XStock pricele.Does the existence of taxes tendf.to favor dividends or repurchases?

Repurchase of shares: It is the buyback or re-acquisition of company's own shares to return money…

Answered: Good Values Inc. is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 9P

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Good Values, Inc., is all-equity-financed. The total market value of the firm currently is $100,000, and there are 2,000 shares outstanding. The firm has declared a $5 per share dividend. Now suppose that instead of paying a dividend Good Values plans to repurchase $10,000 worth of stock. Ignore taxes. a. What will be the stock price before and after the repurchase? b. Suppose an investor who holds 200 shares sells 20 of her shares back to the firm. If there are no taxes on dividends or capital gains, show that she should be indifferent between the repurchase and the dividend. c. Show that if dividends are taxed at 30% and capital gains are not taxed, the value of the firm is higher if it pursues the share repurchase instead of the dividend.
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