Earnings per share for $2025$

Number of shares outstanding

Target payout ratio

Planned dividend per share

Stock price, year$-$end $2025$

$$5\mathrm{.}50$

$40$ million

$50\%$

$$2\mathrm{.}75$

$$130$

House of Herring plans to pay the entire dividend early in January $2026.$ All corporate and personal taxes were repealed in $2024.$

a$.$ Other things equal, what will be House of Herring's stock price after the planned dividend payout? $($Round your answer to $2$

decimal places.$)$

b$-1.$ Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares. Will the stock

price change due to the announcement?

b$-2.$ Assume that investors learn nothing about the company's prospects from the announcement. How many shares will the company

need to repurchase? $($Do not round intermediate calculations. Enter your answer in whole numbers not in millions. Round your

answer to the nearest whole number.$)$

Suppose that, instead of canceling the dividend, the company increases dividends to $$5\mathrm{.}50$ per share and then issues new shares to

recoup the extra cash paid out as dividends. Again, assume investors learn nothing from the announcement about House of Herring's

prospects.

c$-1.$ What happens to the with$-$dividend share price?

c$-2.$ What happens to the ex$-$dividend share price? $($Do not round intermediate calculations. Round your answer to $2$ decimal

places.$)$

c$-3.$ How many shares will need to be issued? $($Do not round intermediate calculations. Enter your answer in whole numbers not in

millions. Round your answer to the nearest whole number.$)$