Go back again to the first Hewlard Pocket balance sheet. Now assume that Pocket wins a lawsuit

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Go back again to the first Hewlard Pocket balance sheet. Now assume that Pocket wins a lawsuit and is paid $100,000 in cash. The market value of the equity rises by that amount, and Pocket decides to pay out $2 per share instead of $1 per share.

a. What will be Pocket's stock price if the payout comes as a cash dividend?

b. What will be Pocket's stock price if the payout comes as a share repurchase?

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Fundamentals of Corporate Finance

ISBN: 978-0077861629

8th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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Question Posted: Jun 30, 2016 09:27 AM

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Go back again to the first Hewlard Pocket balance sheet. Now assume that Pocket wins a lawsuit

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Fundamentals of Corporate Finance

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