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DIA [1.3K]
3 years ago
6

Assume you are the CFO of a company that has accumulated a significant amount of cash, well beyond its foreseeable needs. The co

mpany’s CEO has asked your opinion about using the cash to repurchase company shares or using the cash to distribute an extraordinary dividend to your shareholders. In a brief memo, explain to the CEO what the pros and cons of each of these are. You may assume your company is a fictitious one and assign to it whatever circumstances you like or you may assume your company is an actual existing corporation. Your memo should include at least two references to published works like books, articles, etc.
Business
1 answer:
boyakko [2]3 years ago
4 0

Answer:

I believe that the best action is to repurchase stocks.

Paying a large and unexpected dividend will yield an immediate return, but it will also decrease the stock's price. On the other hand, repurchasing stocks will result in lower outstanding stocks and the same cash flows. This will result in higher stock prices. Supposedly, upper management has the duty to increase the wealth of stockholders and that is achieved through higher stock prices.

Explanation:

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What is one TRUE statement about the stock exchange?
Travka [436]

Answer:

Explanation:

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2 years ago
Peak performance sporting goods company has reported net income after taxes = $3,750,000, with 18,250,000 shares outstanding. ba
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2 years ago
Strait Co. manufactures office furniture. During the most productive month of the year, 3,700 desks were manufactured at a total
Paladinen [302]

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Option (c) is correct.

Explanation:

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Highest level of activity = 3,700

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Total cost at lowest level of activity = $65,000

Here, we are using high-low method of cost estimation,

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= (Total cost at highest level of activity - Total cost at lowest level of activity) ÷ (Highest level of activity - Lowest level of activity)

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