A company called Nitram Ltd. has $300 million of excess cash.

The firm has no debt and 480 million shares outstanding with current market price of $10.

The board of directors has decided to pay out this cash as a dividend.

Assuming a perfect capital market:

Calculate the ex-dividend price per share.

If instead the board decided to use the cash to do a share repurchase, calculate the number of shares the company would be able to repurchase from the market.

In the case of a share repurchase, calculate the market cap once the buy-back is complete.

In the case of a share repurchase, calculate the price per share once the buy-back is complete.

Explain why a corporation would choose share buy-backs as opposed to paying dividends as a form of distributing the companys income to its shareholders.