Share repurchase proposal: Currently, the firm has available capital (cash and net income) of approximately $5,000,000. There is a large block of stock available at $25 a share.

If the firm decides to spend this amount of excess cash on a share repurchase program, how many shares of stock will be outstanding after the stock repurchase is completed?

What are the benefits of repurchasing shares? How will this affect the capital structure of the company? How can this be interpreted in the marketplace?

Would a dividend be better? Please discuss the pros and cons of dividends and share buybacks. Make a recommendation to management.

Why is it being assumed that there are 15,000,000 initial outstanding shares? Where is that in the question?