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The HNH Corporation will pay a constant dividend of $ 1.25 per share, per year, in perpetuity. Assume all investors pay a 25 % tax on dividends and that there is no capital gains tax. The cost of capital for investing in HNH stock is 11 % . a. What is the price of a share of HNH stock? b. Assume that management makes a surprise announcement that HNH will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of a share of HNH stock now? a. What is the price of a share of HNH stock? The price of a share of HNH stock is $ nothing. ?(Round to the nearest cent.)

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Financial Management, Finance

Category:- Financial Management
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