Derick Corporation is currently an unlevered firm with 500 million shares outstanding, $250 million of excess cash, and a current stock price of $15 per share. The companys board intends to distribute the cash as a dividend. Required:

i.) Calculate the ex-dividend share price of derick stock (Assume that stock is trading in a perfect capital market).

ii.) Assume that instead of paying the dividend, the firm decides to use the cash for the share repurchase, then what is the effect of this decision on the stock price of the firm? (Assume that stock is trading in a perfect capital market).

iii) Assuming the perfect capital market assumption, which policy (dividend payout or share repurchase) makes investors better off?