Answer:
1. The ex-dividend price of a share is $10.49
2. The price of the shares once the repurchase is complete is $11 per hare
3. In a perfect capital market, the policy b would make investors in the firm better off
Explanation:
1. In order to calculate the ex-dividend price of a share in a perfect capital market we would have to make the following calculation:
ex-dividend price of a share=current market price-dividend per share
current market price=$11 per share
dividend per share= $285 million/549 million
dividend per share=$0.51 per share
Therefore, ex-dividend price of a share=$11-$0.51
ex-dividend price of a share=$10.49
2. According to the given data the current market price is $11 per share, therefore, the price of the shares once the repurchase is complete If the board instead decided to use the cash to do a one-time share repurchase is $11 per share
3. In a perfect capital market, the policy b would make investors in the firm better off
