Olusegun Ayadi Problem #1 Last week Lucky Strike Inc. was worth $100M and its shares traded for S10 (there are 10 million shares outstanding), Lucky is an all equity firm. Yesterday Lucky management announced that the company won $20 million in the lottery and the stock price rose to $12. Lucky is trying to decide whether to issue a $2 dividend or repurchase 1.667 million shares for 512 each. You own 100 shares of Lucky Strike. If your marginal tax rate on dividends is 15% and 25% on capital gains, what do you want the company to do? Assume that you bought your shares last week and will sell your shares after the dividend or repurchase. Reply