Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
Question
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Chapter 17, Problem 1P
Summary Introduction

To discuss: The ways to spend the firm’s free cash flow.

Introduction:

Share repurchase is an alternative method to pay the cash to the company’s investors through a way of buy back of shares or shares repurchase. Distribution of portion of earnings by the company to its shareholders is termed as dividends.

Expert Solution & Answer
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Explanation of Solution

Given information:

The firm satisfies its entire interest obligation.

Explanation:

The firm can use its free cash flow for further investments or it can retain them for further purposes or the firm can just hold them in mode of cash. The other option is that it can distribute the cash to its equity holders in a way of issuing the dividends or through shares repurchase.

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Chapter 17 Solutions

Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book

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