Question
Draper, Inc. has 7 million common shares outstanding with a market price of $8 per share. The firm has $12 million in extra cash that
Draper, Inc. has 7 million common shares outstanding with a market price of $8 per share. The firm has $12 million in extra cash that it plans to use in a stock repurchase.
a. What is the firms value of operations?
b. How many shares will remain after the repurchase?
c. What is one advantage of stock repurchases as compared to dividends?
d. What is one disadvantage of stock repurchases as compared to dividends?
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Public Finance In Canada
Authors: Harvey Rosen, Beverly George Dahlby, Roger Smith, Jean-Francois Wen, Tracy Snoddon
3rd Canadian Edition
0070951659, 978-0070951655
