Repurchase of stock) The Dunn Corporation is planning to pay dividends of $500,000. There are 250,000 shares outstanding, and earnings per share are $5. The stock should sell for $50 after the ex-dividend date. If, instead of paying a dividend, the firm decides to repurchase stock, a. What should be the repurchase price? b. How many shares should be repurchased? c. What if the repurchase price is set below or above your suggested price in part a? d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock? a. What should be the repurchase price? (Round to the nearest dollar.) b. How many shares should be repurchased? shares (Round to the nearest whole number.) c. What if the repurchase price is set below or above your suggested price in part a? "The capital gains to be received by the stockholders would not be equal to the intended dividend, thus resulting in a dollar benefit or loss to the stockholders." Is the above statement true or false? (Select from the drop-down menu) d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock? "Unless you I have a need for current income, you would probably prefer the stock repurchase plan." Is the above statement true or false? (Select from the drop-down menu)
Repurchase of stock) The Dunn Corporation is planning to pay dividends of $500,000. There are 250,000 shares outstanding, and earnings per share are $5. The stock should sell for $50 after the ex-dividend date. If, instead of paying a dividend, the firm decides to repurchase stock, a. What should be the repurchase price? b. How many shares should be repurchased? c. What if the repurchase price is set below or above your suggested price in part a? d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock? a. What should be the repurchase price? (Round to the nearest dollar.) b. How many shares should be repurchased? shares (Round to the nearest whole number.) c. What if the repurchase price is set below or above your suggested price in part a? "The capital gains to be received by the stockholders would not be equal to the intended dividend, thus resulting in a dollar benefit or loss to the stockholders." Is the above statement true or false? (Select from the drop-down menu) d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock? "Unless you I have a need for current income, you would probably prefer the stock repurchase plan." Is the above statement true or false? (Select from the drop-down menu)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Repurchase of stock) The Dunn Corporation is planning to pay dividends of $500,000. There are 250,000 shares outstanding, and earnings per share are $5.
The stock should sell for $50 after the ex-dividend date. If, instead of paying a dividend, the firm decides to repurchase stock,
a. What should be the repurchase price?
b. How many shares should be repurchased?
c. What if the repurchase price is set below or above your suggested price in part a?
d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock?
a. What should be the repurchase price?
(Round to the nearest dollar.)
b. How many shares should be repurchased?
shares (Round to the nearest whole number.)
c. What if the repurchase price is set below or above your suggested price in part a?
"The capital gains to be received by the stockholders would not be equal to the intended dividend, thus resulting in a dollar benefit or loss to the stockholders."
Is the above statement true or false?
(Select from the drop-down menu)
d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock?
"Unless
you I have a need for current income, you would probably prefer the stock repurchase plan."
Is the above statement true or false?
(Select from the drop-down menu)
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