Natsam corporation has 250 million of excess cash the firm, Finance Basics

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Natsam corporation has 250 million of excess cash the firm

Natsam 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. Natsamâ's board has decided to payout this cash as a one-time dividend.

a. What is the ex-dividend price of a share in a perfect capital market?

b. If the board instead decided to use the cash to do a one-time share repurchase, in a perfect capital market, what is the price of the shares once the repurchase is complete?

c. In a perfect capital market, which policy in part (a) or (b) makes investors in the firm better off?

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Finance Basics: Natsam corporation has 250 million of excess cash the firm

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Finance Basics: Natsam corporation has 250 million of excess cash the firm

Reference No:- TGS0606475

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Finance Basics: Natsam corporation has 250 million of excess cash the firm

Reference No:- TGS0606475

Recent Questions Asked Finance Basics

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