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Harris Corporation has $131 million in cash, and 60 million shares outstanding. Suppose the corporate tax rate is 38%, and investors pay no taxes on
Harris Corporation has $131 million in cash, and 60 million shares outstanding. Suppose the corporate tax rate is 38%, and investors pay no taxes on dividends, capital gains, or interest income. Investors had expected Harris to pay out the $131 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 V by $ per share. (Select from the drop-down menu and round the share price to three decimal places.)
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