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Payout Corp has regularly paid a quarterly dividend of $50 per share on its 20000 outstanding shares Now suppose that Payout announces that instead of paying this dividend it plans to repurchase

Payout Corp. has regularly paid a quarterly dividend of $.50 per share on its 20,000 outstanding shares. Now suppose that Payout announces that instead of paying this dividend, it plans to repurchase $10,000 worth of stock instead. a. What effect will the repurchase have on an investor who currently holds 100 shares and sells 1 of those shares back to the company in the repurchase? b. Compare the effects of the repurchase to the effects of the cash dividend that you worked out in Problem 5.
 

May 23 2020 View more View Less

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