Wamwam Corporation has $250 million of excess cash. The firm has no debt and 500 million shares outstanding with a current market price of $15 per share.

a. If Wamwams board decided to pay out this cash as a one-time dividend, what would the ex-dividend price of a share be, assuming perfect capital markets?

b. If the board instead decided to use the cash to do a one-time share repurchase, what would be the price of the shares once the purchase is complete (again assuming perfect capital markets)?

c. Which policy, in (a) or (b), makes investors in the firm better off?