Natsam Corporation has

$229

million of excess cash. The firm has no debt and

484

million shares outstanding with a current market price of

$14

per share. Natsam's board has decided to pay out this cash as a one-time dividend.

a. What is the ex-dividend price of a share in a perfect capital market?

b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete?

c. In a perfect capital market, which policy in part

(a)

or

(b)

makes investors in the firm better off?