Hors dAge Cheeseworks has been paying a regular cash dividend of $4.80 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 109,000 shares outstanding selling for $80 per share. The company has sufficient cash on hand to pay the next annual dividend at t = 1.

Suppose that, starting in year 1, Hors dAge 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.

	Increase
	Decrease
	Remain the same

b. How many shares will Hors dAge purchase? (Round your answer to the nearest whole number.)

Number of shares repurchased

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.

	Share Price
Year	Old Policy	New Policy
1	$	$
2	$	$
3	$	$