Use this information for Q5-Q6. Imagine an all-equity company with excess cash of $300,000. The...
70.2K
Verified Solution
Link Copied!
Question
Finance
Use this information for Q5-Q6. Imagine an all-equity company with excess cash of $300,000. The company's net income is $50,000. The company's balance sheet (market value) is as follows: Cash $ 300,000 Debt 0 Other assets $ 700,000 Equity_$1,000,000 Total $1,000,000 Total $1,000,000 The company currently has 100,000 shares outstanding. You currently hold 2000 shares (2% of the equity). The company is considering using the $300,000 to repurchase some shares from the investors. Q5: Suppose that there are no taxes and transactions costs. How many shares do you need to sell in the repurchase to generate the same cash dividend if the company chose to use $300,000 to pay cash dividends instead of repurchase shares? After the repurchase your % ownership is? 400 shares: 1% ownership 300 shares; 2% ownership 600 shares: 2% ownership 500 shares: 1% ownership
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
