House of haddock has 5000 shares outstanding and the stock, Ask an Expert

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House of Haddock has 5,000 shares outstanding and the stock price is $140. The company is expected to pay a dividend of $20 per share next year and thereafter the dividend is expected to grow indefinitely by 5% per year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock.

Q: What is the total value of the company before and after the announcement, and what is the value of one share?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9881423

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