Stanton Co. has 7 milhou conmon shares outstanding with a market price of $11 per s has $12 million in extra cash that it plans to use in a stock repurehase What is the firm's value of operations? How many shares will remain after the repurchase? What are two advantages of stock repurchases as compared to dividends? What are two disadvantages of stock repurel to dividend-

Stanton Co. has 7 milhou conmon shares outstanding with a market price of $11 per s has $12 million in extra cash that it plans to use in a stock repurehase What is the firm's value of operations? How many shares will remain after the repurchase? What are two advantages of stock repurchases as compared to dividends? What are two disadvantages of stock repurel to dividend-

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter15: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 6MC: Suppose IWT has decided to distribute $50 million, which it presently is holding in liquid...

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what is the firm’s cost of preferred stock and cost of a new issue of common stock? Which of the two sources offers a lower cost?
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Answer the following problem with a full solution and pls. don't use excel.
Suppose IWT has decided to distribute $50 million, which it presently is holding in liquid short-term investments. IWT’s value of operations is estimated to be about $1,937.5 million; it has $387.5 million in debt and zero preferred stock. As mentioned previously, IWT has 100 million shares of stock outstanding. Assume that IWT has not yet made the distribution. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Now suppose that IWT has just made the $50 million distribution in the form of dividends. What is IWT’s intrinsic value of equity? What is its intrinsic stock price per share? Suppose instead that IWT has just made the $50 million distribution in the form of a stock repurchase. Now what is IWT’s intrinsic value of equity? How many shares did IWT repurchase? How many shares remained outstanding after the repurchase? What is its intrinsic stock price per share after the repurchase?