If this firm plans to repurchase 10000 worth of stock, Financial Management

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If this firm plans to repurchase 10000 worth of stock

Omega, Inc., is all-equity financed. The total market value of the firm currently is $200,000, and there are 5,000 shares outstanding. Ignore taxes.

a. The firm has declared a $4 per share dividend. The stock will go ex-dividend tomorrow. At what price will the stock sell today? Tomorrow?

b. If this firm plans to repurchase $10,000 worth of stock, instead of paying a dividend, what will be the stock price before and after the repurchase?

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Financial Management: If this firm plans to repurchase 10000 worth of stock

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