Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Harns Corporation has S218 milion n cash and 146 million shares ou standing. Suppose the corporate tax rate is 32%, and investors pay no taxes

image text in transcribed

Harns Corporation has S218 milion n cash and 146 million shares ou standing. Suppose the corporate tax rate is 32%, and investors pay no taxes on dividends, capital gains or interest income. Investors had expected Harris to pay out the $218 million through a share repurchase. Suppose instead that Harris announces it will permanently retain the cash, and use the interest on the cash to pay a regular dividend. If there are no other benefits of retaining the cash, how will Harris' stock price change upon this announcement? After the announcement Harris' stock price will | | by SL per share. (Select from the drop-down menu and round the share price to three decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions