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Honeybee Co. is a firm with $4.5 million in assets plus $500,000 in excess cash....

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Finance

Honeybee Co. is a firm with $4.5 million in assets plus $500,000 in excess cash. The firm has 25,000 shares outstanding and is expecting $15,000 in annual net income for the foreseeable future with a 100% dividend policy. Honeybee is considering two different strategies to payout its excess cash. The first strategy is to pay out the excess cash as an extra dividend on top of the normal dividend. The second strategy is to use the excess cash to buyback stock shares. The third strategy would be to keep the excess cash.

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