Warfront Limited is a toy manufacturer. In 2021, the company had an earnings per share of $4. There are 30 million shares outstanding. The company's management has a target payout ratio of 50%. The planned dividend per share is $2.00 and the share price at the end of 2021 is $40. a) Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares (assume that investors do not learn any other information from the announcement). 1. What happens to the share price on the announcement date II. Assume that the investors learn nothing about the company's prospects from the announcement. How many shares will the company need to repurchase? b) Suppose the company increases dividends to $4.00 per share and then issues new shares to recoup the extra cash paid out as dividends. 1. What happens to the with- and ex-dividend share prices? Warfront Limited is a toy manufacturer. In 2021, the company had an earnings per share of $4. There are 30 million shares outstanding. The company's management has a target payout ratio of 50%. The planned dividend per share is $2.00 and the share price at the end of 2021 is $40. a) Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares (assume that investors do not learn any other information from the announcement). 1. What happens to the share price on the announcement date II. Assume that the investors learn nothing about the company's prospects from the announcement. How many shares will the company need to repurchase? b) Suppose the company increases dividends to $4.00 per share and then issues new shares to recoup the extra cash paid out as dividends. 1. What happens to the with- and ex-dividend share prices