Bacchus Plc has 50 million in excess cash and no debt. It expects to generate additional free cash flows of 40 million per year in subsequent years and will pay out these future free cash flows as regular dividends. Bacchus unlevered cost of capital is 10% and there are 10 million shares outstanding. The firms board is meeting to decide whether to pay out its 50 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock.

a. If Bacchus uses all of the 50 million in excess cash to pay a special dividend, what is the cum-dividend price?

b. Assume that Bacchus uses the entire 50 million to repurchase the shares. How many shares can be repurchased?

c. Assume that you own 2500 shares in Bacchus and that Bacchus uses the entire 50 million to repurchase shares. If you are unhappy with this decision and would prefer that Bacchus used the excess cash to pay a dividend instead. How many shares will you have to sell to receive the amount of cash as if Bacchus paid you a dividend?

d. Suppose you own 4000 shares of Bacchus stock and that it uses all of the 50 million to pay a special dividend. If you did not prefer to receive a dividend, how can you undo the dividend?