Problem $19-15$ Dividend Policy

Mahomes Company has a current period cash flow of $$1\mathrm{.}1$ million and pays no dividends. The present value of the company's future cash flows is $$24$ million. The company is entirely financed with equity and has $730,000$ shares outstanding. Assume the dividend tax rate is zero.

a$.$ What is the share price of the company's stock? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Share price

b$.$ Suppose the board of directors of the company announces its plan to pay out $50$ percent of its current cash flow as cash dividends to its shareholders. Jeff Miller, who owns $1,300$ shares of the company's stock, wants to achieve a zero payout policy on his own, by buying or selling shares. How many shares should he sell or buy? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Number of shares to