Corporate Finance
3rd Edition
ISBN: 9780132992473
Author: Jonathan Berk, Peter DeMarzo
Publisher: Prentice Hall
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 1P
Summary Introduction
To discuss: The ways to spend the firm’s
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
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.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
What is the Free Cash Flow to Equity (FCFE)model? How might it be applied? When is it notappropriate?
What is a “liquidity premium?” When do investors increase their attention to such a premium?
Discuss the advantages and disadvantages of options in the financial markets?
What is Cash conversion cycle? How the company can improve its cash conversion cycle? give three suggestions
Chapter 17 Solutions
Corporate Finance
Ch. 17.1 - Prob. 1CCCh. 17.1 - Prob. 2CCCh. 17.2 - Prob. 1CCCh. 17.2 - In a perfect capital market, how important is the...Ch. 17.3 - Prob. 1CCCh. 17.3 - Prob. 2CCCh. 17.4 - Prob. 1CCCh. 17.4 - Prob. 2CCCh. 17.5 - Is there an advantage for a firm to retain its...Ch. 17.5 - Prob. 2CC
Ch. 17.6 - Prob. 1CCCh. 17.6 - Prob. 2CCCh. 17.7 - Prob. 1CCCh. 17.7 - Prob. 2CCCh. 17 - Prob. 1PCh. 17 - ABC Corporation announced that it will pay a...Ch. 17 - Prob. 3PCh. 17 - RFC Corp. has announced a 1 dividend. If RFCs...Ch. 17 - Prob. 5PCh. 17 - KMS Corporation has assets with a market value of...Ch. 17 - Natsam Corporation has 250 million of excess cash....Ch. 17 - Suppose the board of Natsam Corporation decided to...Ch. 17 - Prob. 9PCh. 17 - Suppose BE Press paid dividends at the end of each...Ch. 17 - The HNH Corporation will pay a constant dividend...Ch. 17 - Prob. 12PCh. 17 - Prob. 13PCh. 17 - Prob. 14PCh. 17 - Suppose that all capital gains are taxed at a 25%...Ch. 17 - Prob. 16PCh. 17 - Prob. 17PCh. 17 - Prob. 18PCh. 17 - Prob. 19PCh. 17 - A stock that you know is held by long-term...Ch. 17 - Clovix Corporation has 50 million in cash, 10...Ch. 17 - Assume capital markets are perfect. Kay Industries...Ch. 17 - Redo Problem 22., but assume that Kay must pay a...Ch. 17 - Harris Corporation has 250 million in cash, and...Ch. 17 - Redo Problem 22, but assume the following: a....Ch. 17 - Prob. 26PCh. 17 - Prob. 27PCh. 17 - Explain under which conditions an increase in the...Ch. 17 - Why is an announcement of a share repurchase...Ch. 17 - AMC Corporation currently has an enterprise value...Ch. 17 - Prob. 31PCh. 17 - Prob. 32PCh. 17 - Explain why most companies choose to pay stock...Ch. 17 - Prob. 34PCh. 17 - Prob. 35P
Knowledge Booster
Similar questions
- Does the PW method assume that the interest rate charged to any fundswithdrawn from a firm's investment pool would be equal to the MARR?arrow_forwardWhat is Computron’s free cash flow? What are Computron’s “net uses” of its FCF?arrow_forwardExplain how to use the free cash flow valuation model to find the price per share of common equity.arrow_forward
- What is the process of solving a cash flow for an unknown interest rate?arrow_forwardWhy is the T-bill’s return independent of the state of the economy? Do T-bills promise a completely risk-free return? Explain?arrow_forwardWhat is an opportunity cost rate?How is this rate used in discounted cash flow analysis? Is the opportunity rate a single number that is used to evaluate all potential investments?arrow_forward
- How can a company offset risk using interest rate swaps?arrow_forwardShould a firm use debt instruments as a financing option, what are its effects on the firm’s expected return and risk?arrow_forwardWhat is the present value of the following cash flow streams at an interest rate of 6.25%? Which cash flow (top or bottom) is better and why from an investment standpoint?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:9781337514835
Author:MOYER
Publisher:CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College