Hors dAge Cheeseworks has been paying a regular cash dividend of $4.30 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 105,000 shares outstanding selling for $86 per share. The company has sufficient cash on hand to pay the next annual dividend. Suppose that, starting in year 1, Hors dAge decides to cut its cash dividend to zero and announces that it will repurchase shares instead.

c. Project and compare future stock prices for the old and new policies. (Do not round intermediate calculations. Round your old policy answers to the nearest whole number and your new policy answers to 2 decimal places.)

House of Haddock has 5,120 shares outstanding and the stock price is $152. The company is expected to pay a dividend of $21 per share next year and thereafter the dividend is expected to grow indefinitely by 5% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend.

1. a-1. What is the total value of the company before the announcement?

2. a-2. What is the total value of the company after the announcement?

3. a-3. What is the value of one share?

4. b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share.

Return to question 3 c. Project and compare future stock prices for the old and new policies. (Do not round intermediate calculations. Round your old policy answers to the nearest whole number and your new policy answers to 2 decimal places.) * Answer is not complete. Year 1 2 3 Share Price Old Policy New Policy $ 86$ 5,000.00 X $ 86 $ 86 Check my work 5 House of Haddock has 5,120 shares outstanding and the stock price is $152. The company is expected to pay a dividend of $21 per share next year and thereafter the dividend is expected to grow indefinitely by 5% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share. Complete this question by entering your answers in the tabs below. Reg A1 to A3 Reg B a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? Return to question 3 c. Project and compare future stock prices for the old and new policies. (Do not round intermediate calculations. Round your old policy answers to the nearest whole number and your new policy answers to 2 decimal places.) * Answer is not complete. Year 1 2 3 Share Price Old Policy New Policy $ 86$ 5,000.00 X $ 86 $ 86 Check my work 5 House of Haddock has 5,120 shares outstanding and the stock price is $152. The company is expected to pay a dividend of $21 per share next year and thereafter the dividend is expected to grow indefinitely by 5% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share. Complete this question by entering your answers in the tabs below. Reg A1 to A3 Reg B a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share