Hors d'Age Cheeseworks has been paying a regular cash dividend of $$4\mathrm{.}50$ per share each year for over a decade. The company isHors d'Age Cheeseworks has been paying a regular cash dividend of $$4\mathrm{.}50$ per share each year for over a decade. The company is

paying out all its earnings as dividends and is not expected to grow. There are $106,000$ shares outstanding selling for $$90$ per share.

The company has sufficient cash on hand to pay the next annual dividend.

Suppose that, starting in year $1,$ Hors d'Age decides to cut its cash dividend to zero and announces that it will repurchase shares

instead.

a$.$ What is the immediate stock price reaction? Ignore taxes, and assume that the repurchase program conveys no information

about operating profitability or business risk.

b$.$ How many shares will Hors d'Age purchase?

c$.$ Project and compare future stock prices for the old and new policies.

Complete this question by entering your answers in the tabs below.

Req A and $B$

Req C

Project and compare future stock prices for the old and new policies.

Note: Do not round intermediate calculations. Round your old policy answers to the nearest whole number and your new

policy answers to $2$ decimal places.

paying out all its earnings as dividends and is not expected to grow. There are $106,000$ shares outstanding selling for $$90$ per share.

The company has sufficient cash on hand to pay the next annual dividend.

Suppose that, starting in year $1,$ Hors d'Age decides to cut its cash dividend to zero and announces that it will repurchase shares

instead.

a$.$ What is the immediate stock price reaction? Ignore taxes, and assume that the repurchase program conveys no information

about operating profitability or business risk.

b$.$ How many shares will Hors d'Age purchase?

c$.$ Project and compare future stock prices for the old and new policies.

Complete this question by entering your answers in the tabs below.

Req A and $B$

a$.$ What is the immediate stock price reaction? Ignore taxes, and assume that the repurchase program conveys no

information about operating profitability or business risk.

b$.$ How many shares will Hors d'Age purchase?

Note: Round your answer to the nearest whole number.

a$.$ Immediate stock price reaction

remains the same

b$.$ Number of shares repurchased