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AMD Co. will pay a constant dividend of $5 per share each year, forever. Suppose all investors pay a 25% tax on dividends, and there
AMD Co. will pay a constant dividend of $5 per share each year, forever. Suppose all investors pay a 25% tax on dividends, and there is no capital gains tax. The cost of capital for investing in AMD stock is 10%.
The management announced that AMD will no longer pay dividends but will use the cash to repurchase stock. The price of a share of AMD's stock is now closest to ________.
$60.00 $100.00 $50.00 $40.00
AMD Co. will pay a constant dividend of $5 per share each year, forever. Suppose all investors pay a 25% tax on dividends, and there is no capital gains tax. The cost of capital for investing in AMD stock is 10%.
The management announced that AMD will no longer pay dividends but will use the cash to repurchase stock. The price of a share of AMD's stock is now closest to ________.
$60.00
$100.00
$50.00
$40.00
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