Fundamentals of Corporate Finance (4th Edition)

Chapter 17

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The ex-dividend date occurs two business days ... more

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A firm can simply buy back its shares on the open ... more

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In a perfect market, the share price should not ... more

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In a perfect market, the firm's choice to either ... more

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Usually for long-term investors, the capital gains... more

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The dividend puzzle is the fact that a firm ... more

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No, in a perfect market, the decision to retain ... more

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Corporate tax rates are higher than that for ... more

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The management is not so optimistic about future ... more

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A stock dividend is when a firm issues additional ... more

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Cash can be distributed to shareholders in the ... more

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There are three types of share repurchase ... more

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The higher tax rate on dividends results in ... more

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An increase in dividends does not always signify ... more

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Share repurchase is a positive signal to the ... more

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$49 ; In a perfect market, when a dividend is paid... more

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$18 million$20 per share ; Identify the number of ... more

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$2 million ; Identify the desired present value of... more

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The dividend of $0.50 and the ex-dividend price of... more

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Special dividend now ; The corporate tax of 35% ... more

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Retaining cash will be disadvantageous to the firm... more

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There is an advantage in retaining the cash, as a ... more

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$50 ; Identify the variables for calculating the ... more

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The share price will be $75, if the enterprise ... more

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The share price will be $70, if the enterprise ... more

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If it is good news, they will purchase it before ... more

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If it is good news, they will purchase it before ... more

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2,400:1 ; Identify the variables for calculating ... more

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$8.21 ; Identify the variables for calculating the... more

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Current share price = $49.10Total shares ... more

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The purchase price is $10.82 per share. ; The ... more

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  Before-Tax AmountAfter-Tax Amount Share ... more

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; The spreadsheet shows the after-tax cash flows ... more

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Considering the magnitude of the transaction, the ... more

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At the time of payout: The after-tax cash flows do... more

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The only tax consequence is that Company M will ... more

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Company M will be able to buy the shares if it ... more

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The shareholders who don't sell their shares will ... more

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Benefit:Reduction in cost of capital or WACC Costs... more

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The special dividend per share is equal to the tax... more

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