White Chocolate Co. has a current period cash flow of $1.35 million and pays no dividends. The present value of the company’s future cash flows is $17.8 million. The company is entirely financed with equity and has 315,000 shares outstanding. Ignore taxes.

a. What is the share price of the company’s stock?

b. Suppose the board of directors of the company announces its plan to pay out 50 percent of its current cash flow as cash dividends to its shareholders. How can a shareholder who owns 1,000 shares of the stock achieve a zero payout policy on his own?