Problem Set 8

Problem Set 8 - price. Given the chart below, what will be...

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BusM 401 Problem Set #8 Payout Policy Instructions: Complete all questions. This problem set is worth 10 points. Problems sets are graded on effort and completeness; you must show your work in order to get full credit. Short answers (“checkpoints”) are available for some questions on Blackboard so that you can check your answers. Full solutions are available on Blackboard after the problem set is due. (Some full answers are found in the back of Higgins; it’s best not to look at these until you have tried your best to answer the question.) You can do this. I know you've got it in you. 1. Do Higgins Chapter 6, #12, assuming that the repurchase would pay out the same total amount of cash as the special dividend. 2. A company wishes to repurchase 1 million shares of its stock, and chooses to do so through a Dutch auction. The chart below shows the number of shares tendered at each
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Unformatted text preview: price. Given the chart below, what will be the total cost for the company to repurchase all 1 million shares? Price Shares Tendered (thousands) $17.00 100 $17.75 125 $18.50 150 $19.00 175 $19.75 200 $20.00 250 $20.25 325 $20.75 250 3. Assume you are in a simplified world with no market imperfections (i.e., no taxes, no signaling effects, no agency problems, no irrational investors, no transaction costs). JKL Corporation has 1,000 shares outstanding currently trading at $100 per share. JKL is considering one of the four options below. What will be the estimated price per share of JKL Corp. stock following each transaction? (Consider each option separately, not in succession.) A cash dividend of $5 per share ______ A stock repurchase of $10,000 ______ A two-for-one stock split ______ A 10% stock dividend ______ 2...
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Problem Set 8 - price. Given the chart below, what will be...

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