I have some difficulties doing this problem. I would appreciate if someone can help.

John Jones is the Treasurer of Specialty Ornaments, Inc. ("SPI). During the recent operating year, the company generated significant free cash flow. Assume SPI is a mid-cap company with its stock actively traded on NASDAQ. The company's stock has historically been attractive to its wealthy investor U.S. client base.

Assuming perfect capital markets, would the Treasurer prefer a payout policy to its investor that uses share repurchases or cash dividends? Explain.