Question 2: Simon Park is on the board of directors of the Tause Corporation, and Tause has announced its plan to pay dividends of $550,000. Presently there are 275,000 shares outstanding, and the earnings per share is $6. It looks to you like the stock should sell for $45 after the ex-dividend date. If instead of paying a dividend, the management decides to repurchase stock

1. What should be the repurchase price that is equivalent to the proposed dividend? (Hint: Ignore any tax effects.)
2. How many shares should the company repurchase?
3. You want to look out for the small shareholders. If someone owns 100 shares, do you think he would prefer that the company pay the dividend or repurchase stock