Natsam Corporation has $291 million of excess cash. The firm has no debt and 526 million shares outstanding with a current market price of $16 per share. Natsam's board has decided to pay out this cash as a one-time divi a. What is the ex-dividend price of a share in a perfect capital market? b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete? c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off? a. What is the ex-dividend price of a share in a perfect capital market? The ex-dividend price is $on a per share basis. (Round to the nearest cent.) b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price The price of the shares once the repurchase is complete is $ per share. (Round to the nearest cent.) c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off? (Select the best choice below.) OA. Investors are better off with policy in part (a). OB. Investors are better off with policy in part (b). OC. Investors are indifferent to either policy. COD the shares once the repurchase is complete?
Natsam Corporation has $291 million of excess cash. The firm has no debt and 526 million shares outstanding with a current market price of $16 per share. Natsam's board has decided to pay out this cash as a one-time divi a. What is the ex-dividend price of a share in a perfect capital market? b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete? c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off? a. What is the ex-dividend price of a share in a perfect capital market? The ex-dividend price is $on a per share basis. (Round to the nearest cent.) b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price The price of the shares once the repurchase is complete is $ per share. (Round to the nearest cent.) c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off? (Select the best choice below.) OA. Investors are better off with policy in part (a). OB. Investors are better off with policy in part (b). OC. Investors are indifferent to either policy. COD the shares once the repurchase is complete?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter14: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 12P: Bayani Bakerys most recent FCF was 48 million; the FCF is expected to grow at a constant rate of 6%....
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Transcribed Image Text:Natsam Corporation has $291 million of excess cash. The firm has no debt and 526 million shares outstanding with a current market price of $16 per share. Natsam's board has decided to pay out this cash as a one-time divide
a. What is the ex-dividend price of a share in a perfect capital market?
b. If the board instead decided to use the cash do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete?
c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off?
C
a. What is the ex-dividend price of a share in a perfect capital market?
The ex-dividend price is $ on a per share basis. (Round to the nearest cent.)
b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete?
The price of the shares once the repurchase is complete is $ per share. (Round to the nearest cent.)
c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off? (Select the best choice below.)
O A. Investors are better off with policy in part (a).
OB. Investors are better off with policy in part (b).
OC. Investors are indifferent either policy.
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