Question
Need help checking if my answers are correct Question 2: I am on the board of directors of the B. Phillips Corporation, and the company
Need help checking if my answers are correct
Question 2: I am on the board of directors of the B. Phillips Corporation, and the company has announced its plan to pay dividends of $648,000. Presently, there are 270,000 shares outstanding, and the earnings per share is $6. It looks to me like the stock should sell for $44 after the ex-dividend date. If instead of paying a dividend, the management decides to repurchase stock.
2. a. What should be the repurchase price that is equivalent to the proposed dividend?
$46.4(Round to the nearest cent.)
2. b. How many shares should the company repurchase?
13966 shares(Round to the nearest whole number.)
2. c. If someone owns 100 shares, do you think she would prefer that the company pay the dividend or repurchasestock?(Select the best choice below.)
A. She would prefer that the company pay the dividend because the value of her stock position will increase more.
B. She would be indifferent between the two because she will receive the same value for her investment in either case.
C. She would prefer that the company repurchase stock because the value of her stock position will increase more.
D. There is not sufficient information to judge the change in the value of her stock position.
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