Question
Just Right Incorporated is considering the option of an extra dividend versus a share repurchase and the impact of both decisions on the firm. Just
Just Right Incorporated is considering the option of an extra dividend versus a share repurchase and the impact of both decisions on the firm. Just Right plans to spend $85,000 in respect ofboth scenarios.Just Right's current earnings are $2.10 per share, and the stock currently sells for $45 per share. Just Right currently has 5,000 shares outstanding.
You own one share of stock in this company.
If the company issues the dividend, what will your total investment be worth? If the company pursues a share repurchase what will be your total investment be worth?
Kindly Ignore taxes and other imperfections. Show all workings.
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