Hors d'Age Cheeseworks has been paying a regular cash dividend of $12 per share each year for more than a decade. The company is paying out all its earnings as dividends and is not expected to grow. There are 84,000 shares outstanding selling for $96 per share. The company has sufficient cash on hand to pay the next annual dividend. Suppose that, starting in year 1, Hors d'Age decides to cut its cash dividend to zero and announces that it will repurchase shares instead. a. Is there any immediate stock price reaction? Ignore taxes, and assume that the repurchase program conveys no information about pperating profitability or business risk.

Hors d'Age Cheeseworks has been paying a regular cash dividend of $12 per share each year for more than a decade. The company is paying out all its earnings as dividends and is not expected to grow. There are 84,000 shares outstanding selling for $96 per share. The company has sufficient cash on hand to pay the next annual dividend. Suppose that, starting in year 1, Hors d'Age decides to cut its cash dividend to zero and announces that it will repurchase shares instead. a. Is there any immediate stock price reaction? Ignore taxes, and assume that the repurchase program conveys no information about pperating profitability or business risk.

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Description: Hors d'Age Cheeseworks has been paying a regular cash dividend of $12 per share each year for more than a decade. The companyis paying out all its earnings as dividends and is not expected to grow. There are 84,000 shares outstanding selling for $96

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 22P

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