6. A company is considering either an open market share repurchase or a cash

dividend of an equal amount. Compared to the open market share repurchase,

the cash dividend is most likely to:

A. increase a shareholder's wealth by a greater amount.

B. increase a shareholder's wealth by a lesser amount.

C. have a relative impact that depends on the tax treatment of the two

alternatives.

7. Studdard Controls recently declared a quarterly dividend of $ 1 .25 payable on

Thursday, April 25, to holders of record on Friday, April 12. What is the last

day an investor could purchase Studdard stock and still receive the quarterly

dividend?

A. April 9.

B. April 10.

C. April 12.

8. Arizona Seafood, Inc., plans $45 million in new borrowing to repurchase

3,600,000 shares at their market price of $ 12.50. The yield on the new debt

will be 12%. The company has 36 million shares outstanding and EPS of $0.60

before the repurchase. The company's tax rate is 40%. The company's EPS after

the share repurchase will be closest to:

A. $0.50.

B. $0.57.

c. $0.67.

9. Northern Financial Co. has a BVPS of $5. The company has announced a $ 15

million share buyback. The share price is $60 and the company has 40 million

shares outstanding. After the share repurchase, the company's BVPS will be

closest to:

A. $4.65.

B. $4.90.

c. $5.03.

10. Which of the following would most likely lead to an increase in a typical firm's

capital investment for the current period?

A. A need to increase inventory.

B. An increase in the firm's expected marginal tax rate.

C. A decrease in the market value of the firm's debt.

Please explain each one of the answers.