How do you determine the amount of shares needed to repurchase?

9. Suarez Enterprises, Inc. plans to issue a dividend of $2.75 per share immediately. Here are the rm's key nancial data: Earnings per share for 2015 $5.50 Shares outstanding 40 million Target payout ratio 50 % Planned dividend per share $2.75 Stock price, year-end 2015 $ 130 Assume there are no corporate or personal taxes, and answer the following questions: I) Other things equal, what will be Suarez's stock price after the planned dividend payout (ex-dividend price)? II) Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares instead. Will there be a change in the stock price upon the announcement? Assume that investors learn nothing about the company's prospects from the announcement (no signaling effect). III) How many shares will the company need to repurchase? a. I) $130 per share; II) No; III) 846,154 shares b. I) $127.25 per share; II) No; III) 846,154 shares c. I) $127.25 per share; II) Yes; III) 864,440 shares d. I) $132.75 per share; II) Yes; III) 828,625 shares