Chapter 17 - Dividends and Dividend Policy
Section: "#%" &oic: &oic: (egular cas) di!idend
Multiple Choice Questions
1. Green Roof Motels has more cash on hand than its operations require. Thus the firm has decided to pay out some of its earnin!s in the form of cash to its shareholders. "hat are these payments to shareholders called# A. dividends $. stoc% $. stoc% payments C. repurchases C. repurchases D. payments-in-%ind D. payments-in-%ind &. stoc% &. stoc% splits Refer to section 17.1
8. The oard o ard of directors of "ilson 9portin! &quipment met this afternoon and passed a resolution to pay a cash dividend of .8' a share net month. :n relation to this dividend today is referred to as ;hich one of the follo;in! dates# 0. decision 0. decision date $. date-of-record $. date-of-record C. declaration date D. payment D. payment date &. e-dividend &. e-dividend date Refer to section 17.1
AACSB: N/A Bloom's: Knowledge Knowledge Difficulty: Basic Learning Obecti!e: "#$" Section: "#%" &oic: Di!idend
AACSB: N/A Bloom's: Knowledge Knowledge Difficulty: Basic Learning Obecti!e: "#$" Section: "#%" &oic: &oic: Declaration date
'. (ester)s *ro+en *oods ,ust paid out ./ a share to its shareholders. The cash for these payments came from a lar!e sale of assets not from any earnin!s of the firm. "hat are these payments to shareholders called# 0. dividends 0. dividends B. distriutions C. repurchases C. repurchases D. payments-in-%ind D. payments-in-%ind &. stoc% &. stoc% splits Refer to section 17.1
/. The e-dividend date is defined as J7/
[email protected] Percenta!e chan!e in price =
[email protected] - '1.22>J '1.22 -7./ percent 17-1'
Chapter 17 - Dividends and Dividend Policy
AACSB: Analytic Bloom's: Analysis Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%1 &oic: *+$di!idend stoc2 rice
33. Randall)s :nc. has ' shares of stoc% outstandin! ;ith a par value of 1. per share. The mar%et value is 1' per share. The alance sheet sho;s 8' in the capital in ecess of par account ' in the common stoc% account and // in the retained earnin!s account. The firm ,ust announced a / percent =small> stoc% dividend. "hat ;ill the alance in the retained earnin!s account e after the dividend# A. 2?/ $. 2@/ C. // D. 31/ &. 3'/ Retained earnin!s //- K=' shares × ./> × 1'L 2?/
38. Dela;are Trust has 8/ shares of common stoc% outstandin! at a mar%et price per share of '7. Currently the firm has ecess cash of 8 total assets of '?@ and net income of 12'. The firm has decided to pay out all of its ecess cash as a cash dividend. "hat ;ill the earnin!s per share e after this dividend is paid# 0. '.3@ $. '.?3 C. '.@2 D. 2.7 &. 2.'8 &arnin!s per share 12'J8/ '.@2
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Small stoc2 di!idend
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%1 &oic: Cas) di!idend
37. 9outhern *ried Chic%en has ? shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et value of 28 per share. The alance sheet sho;s 2@ in the capital in ecess of par account ? in the common stoc% account and 1/' in the retained earnin!s account. The firm ,ust announced a / percent stoc% dividend. "hat ;ill total o;ners) equity e after the dividend# 0. 1?/? $. 1@3 C. 1@@ D. '3? &. '1'' Total equity ;ill not chan!e as this is a small stoc% dividend. Total equity 2@ H ? H 1/' 1@@
3/. 4osh)s :nc. has 7 shares of stoc% outstandin! ;ith a par value of 1. per share and a mar%et value of 2' a share. The alance sheet sho;s 73 in the capital in ecess of par account 7 in the common stoc% account and 38? in the retained earnin!s account. The firm ,ust announced a 1 percent stoc% dividend. "hat is the value of the capital in ecess of par account after the dividend# 0. /3 $. /82 C. 73 D. @77 &. 118 Chan!e in capital in ecess of par =7 shares × .1> × =2' - 1> '17 e; capital in ecess of par account alance 73 H '17 @77
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Small stoc2 di!idend
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$0 Section: "#%4 &oic: Small stoc2 di!idend
3?. Fal)s Marina 9upply has 2/ shares of stoc% outstandin! ;ith a par value of 1. per share and 17-12
Chapter 17 - Dividends and Dividend Policy
a mar%et value of 1@ per share. The alance sheet sho;s 2/ in the common stoc% account '8 in the capital in ecess of par account and 218 in the retained earnin!s account. The firm ,ust announced a 1 percent stoc% dividend. "hat is the value of the capital in ecess of par account after the dividend# 0. $. '/ C. '8 D. /// &. ?7 The capital in ecess of par account ;ill remain at '8 as it does not chan!e ;ith a lar!e stoc% dividend.
3 in the capital in ecess of par account and @82 in the retained earnin!s account. The firm ,ust announced a 1 percent stoc% dividend. "hat ;ill e the value of the common stoc% account after the dividend# 0. / $. 1 C. 11 D. 1/ E. ' Common stoc% K=1 shares × 1.> × 1L H 1 ' AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Large stoc2 di!idend
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Large stoc2 di!idend
71. Feral Communications :nc. has 18 shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et value of 83 per share. The firm ,ust announced a 1 percent stoc% dividend. "hat is the mar%et value per share after the dividend# A. '2. $. 28./ C. 83. D. 3@. &. @'. Mar%et value per share =18 × 83>J=18 × '> '2
3@. Eurt)s Mar%et has ? shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et value of 12 per share. The alance sheet sho;s ? in the common stoc% account '3 in the capital in ecess of par account and 2'7 in the retained earnin!s account. The firm ,ust announced a 1 percent stoc% dividend. "hat ;ill e the alance in the retained earnin!s account after this dividend# 0. B. '87 C. 2'7 D. 87 &. 1'?7 Retained earnin!s 2'7 - K=? shares × 1.> × 1L '87
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Large stoc2 di!idend
7'. Della)s Pool Aalls has 1' shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et price of 2@ a share. The firm ,ust announced a 8-for-2 stoc% split. Ao; many shares of stoc% ;ill e outstandin! after the split# 0. @ shares $. 1 shares C. 1' shares D. 183 shares E. 13 shares umer of shares 1' × 8J2 13 shares
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Large stoc2 di!idend
7. The Tannin! $ed has 1 shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et value of ? per share. The alance sheet sho;s 1 in the common stoc% account 17-18
Chapter 17 - Dividends and Dividend Policy
0. 33 B. 223 C. 8'3 D. /8? &. 33 0 stoc% split does not chan!e the total value of the paid in surplus account.
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
72. 0lfon+o)s :talian Aouse has '/ shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et price of 23 a share. The firm ,ust announced a /-for-2 stoc% split. "hat ;ill the mar%et price per share e after the split# A. '1.3 $. '8.' C. 23. D. /8. &. 3. Mar%et price per share 23 × 2J/ '1.3
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
73. Pre+ario)s has '/ shares of stoc% outstandin! ;ith a par value of 1 per share. The current mar%et value of the firm is ?87. Currently the retained earnin!s account alance is 8'? and the capital in ecess of par value account alance is 1?7. The company ,ust announced a 2-for-1 stoc% split. "hat is the common stoc% account alance after the stoc% split# 0. ?222 B. '/ C. 7/ D. 77222 &. '2' Common stoc% account value efore the stoc% split '/ × 1 '/ 0 stoc% split does not chan!e the total value of the common stoc% account.
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
78. 9outh 9hore (imited has '1 shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et price of 7./ a share. The firm ,ust announced a /-for-' stoc% split. "hat ;ill the par value of the stoc% e after the split# A. .8 $. .? C. 1. D. 1.8 &. 1.3 Par value 1 × ='J/> .8
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
77. The Peanut 9hac% has 3 shares of stoc% outstandin! ;ith a par value of 1 per share. The current mar%et value of the firm is 18/3. The company ,ust announced a 2-for-' stoc% split. "hat ;ill the mar%et price per share e after the split# 0. 1'.18 B. 13.1? C. '8.'7 D. '?.' &. 23.8
7/. Mario)s has 1? shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et price of 8 a share. The alance sheet sho;s 1? in the common stoc% account 223 in the paid in surplus account and 38 in the retained earnin!s account. The firm ,ust announced a /-for-1 stoc% split. "hat ;ill the paid in surplus account value e after the split# 17-1/
Chapter 17 - Dividends and Dividend Policy
par value is 1 per share. The company has ,ust announced a /-for-8 stoc% split. "hat ;ill the mar%et price per share e after the split# A. /.8 $. /?.' C. 3'./ D. 7?.7/ &. ?'./ Mar%et price per share 32 × 8J/ /.8
Mar%et price per share =18/3J3> × 'J2 13.1? AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
7?. "estern Mountain "ater has 11 shares of stoc% outstandin! ;ith a par value of 1 per share. The current mar%et value of the firm is 12/. The alance sheet sho;s a capital in ecess of par value account alance of 3? and retained earnin!s of 8@. The company ,ust announced a '-for-1 stoc% split. "hat ;ill the capital in ecess of par value account alance e after the split# 0. 8/222 $. /8337 C. 3? D. ?3337 &. 1' The paid in surplus account ;ill remain at 3? as a stoc% split has no effect on this account.
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
?1. The Minin! Co. has ' shares of stoc% outstandin!. The current mar%et value of the firm is 2'?. The company has retained earnin!s of '7 capital in ecess of par value of 13 and a common stoc% account value of '. The company is plannin! a '-for-/ reverse stoc% split. "hat ;ill the par value per share e after the split# 0. .1/ $. .' C. 1. D. './ &. /. Par value per share ='J' shares> × /J' './
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
7@. The Peace River Corporation has 37 shares of stoc% outstandin! at a mar%et price of 8? a share. The company has ,ust announced a 2-for-' stoc% split. Ao; many shares of stoc% ;ill e outstandin! after the split# 0. 88337 shares $. /8222 shares C. ?@222 shares D. 1/ shares &. 1?333 shares umer of shares 37 × 2J' 1/ shares
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: (e!erse stoc2 slit
?'. &ast Coast Marina has '' shares of stoc% outstandin!. The current mar%et value of the firm is 1?.@' million. The company has retained earnin!s of 2.? million paid in surplus of 3.7 million and a common stoc% account value of ''. The company is plannin! a 2-for-' stoc% split. "hat ;ill the mar%et price per share e after the split# 0. '?.37 B. /7.22 C. 33.37 D. 1?. &. 1'@.
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
?. Cooper $rands :nc. has 3? shares of stoc% outstandin! at a mar%et price of 32 a share. The 17-13
Chapter 17 - Dividends and Dividend Policy
Mar%et price per share =1?.@'mJ'' shares> × 'J2 /7.22
sellin! for 7? a share. The par value per share is 1. Currently the firm has a total mar%et value of @23. Ao; many shares of stoc% ;ill e outstandin! if the firm does a /-for-' stoc% split# 0. 8? shares $. @3 shares C. 1/ shares D. 2 shares &. 2'' shares umer of shares =@23J7?> × /J' 2 shares
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
?2. 4ean)s "arehouse has 13 shares of stoc% outstandin!. The current mar%et value of the firm is 73?. The company has retained earnin!s of 1'2 paid in surplus of 2'1 and a common stoc% account value of 13. The company is plannin! a /-for-2 stoc% split. "hat ;ill the retained earnin!s account value e after the split# 0. 72? B. 1'2 C. 1/23 D. '/ &. '8// The retained earnin!s ;ill remain at 1'2 as a stoc% split does not affect the alance.
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
?3. Purvis (a;n Products has 1? shares of stoc% outstandin! at a mar%et price of /./ a share. "hat ;ill the mar%et price per share e if the company does a 1-for-8 reverse stoc% split# 0. 1.2? $. /./ C. 11. D. 13./ E. ''. Mar%et price /./ × 8J1 ''
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: (e!erse stoc2 slit
?8. The common stoc% of Chec%ers :nc. is sellin! for /3 a share and the par value per share is 1. Currently the firm has a total mar%et value of ?1'. Ao; many shares of stoc% ;ill e outstandin! if the firm does a 2-for-' stoc% split# 0. @337 shares $. 1'/ shares C. 18/ shares D. 177/ shares E. '17/ shares umer of shares =?1'J/3> × 2J' '17/ shares
?7. The live Fase has /3 shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et value of 11 a share. The company ,ust announced a 2-for-8 reverse stoc% split. Currently you o;n 8 shares of this stoc%. "hat ;ill the total value of your shares e after the reverse stoc% split# 0. 22 B. 88 C. // D. /?37 &. 3222 The total value of your shares ;ill not chan!e. Total value 8=2J8> × 11=8J2> 88
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 slit
?/. The common stoc% of Gillen &ntertainment is 17-17
Chapter 17 - Dividends and Dividend Policy
the C& favors the commencement of a dividend pro!ram. Iou ho;ever oppose any dividend plan at this time. "rite a !ood ar!ument that you can use in the meetin! to support your position. "hile it is true that the firm currently has ecess cash reserves those reserves can est e utili+ed to fund positive PF pro,ects ;hich ;ill increase the value of the firm and thus the value of the shares held y our current shareholders. This increase in value does not create any ta liaility for those shareholders until or unless they opt to sell their shares. Dividends on the other hand ;ill create an immediate ta liaility for the ma,ority of our shareholders ;ho don)t need or prefer dividend income at this time. :f ;e commence a dividend pro!ram ;e may find that our clientele chan!es ;hich is not one of our current !oals. :n addition once ;e pay a dividend ;e need to e prepared to maintain that dividend as any decrease in the dividend at a later date ;ould send the ;ron! messa!e to our shareholders and to the mar%et. (astly should ;e deplete our ecess cash reserves y implementin! a dividend pro!ram ;e mi!ht find ourselves in the uncomfortale position of see%in! additional equity financin! ;hich ;ould e epensive and possily also dilutive to our shareholders. *eedac%6 Refer to section 17./
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: (e!erse stoc2 slit
??. The Green *lorist has '? shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et value of 7 a share. The company ,ust announced a '-for-/ reverse stoc% split. Currently you o;n 2 shares of this stoc%. Ao; many shares ;ill you o;n after the reverse stoc% split# 0. 3 shares $. 1' shares C. 8? shares D. 3 shares &. 7/ shares umer of shares 2 × 'J/ 1' shares AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: (e!erse stoc2 slit
?@. City Center Pharmacy has 11/ shares of stoc% outstandin! ;ith a par value of 1 per share and a mar%et value of 1 a share. The company ,ust announced a 2-for-7 reverse stoc% split. "hat ;ill the mar%et value per share e after the reverse stoc% split# 0. 8.'@ $. 7. C. 1. D. '2.22 &. '/.'1 Mar%et value per share 1 × 7J2 '2.22
AACSB: (eflecti!e t)in2ing Bloom's: Analysis Difficulty: ntermediate Learning Obecti!e: "#$, Section: "#%. &oic: Di!idend olicy
@1. &plain the meanin! of the dividend clientele effect and ;hy it is important. There are certain !roups that prefer lo; dividend payouts and certain !roups that prefer hi!h dividend payouts these are dividend clienteles. :f clienteles eist then ;henever a firm chan!es its dividend policy it ,ust s;aps one clientele for another. :n the end the firm cannot affect its value y ma%in! chan!es in its dividend policy unless there are unsatisfied clienteles. *eedac%6 Refer to section 17./
AACSB: Analytic Bloom's: Alication Difficulty: Basic Learning Obecti!e: "#$3 Section: "#%4 &oic: (e!erse stoc2 slit
Essay Questions
@. Iou are the C* of a non-dividend payin! firm that currently has ecess cash reserves. Iou are preparin! for an internal mana!ement meetin! ;here dividends are on the a!enda. Iou %no; that
AACSB: (eflecti!e t)in2ing Bloom's: Comre)ension
17-1?
Chapter 17 - Dividends and Dividend Policy
Difficulty: Basic Learning Obecti!e: "#$, Section: "#%. &oic: Clienteles
AACSB: (eflecti!e t)in2ing Bloom's: Analysis Difficulty: ntermediate Learning Obecti!e: "#$, Section: "#%, &oic: -omemade di!idend
@'. 9toc% repurchase pro!rams appear to ecomin! more popular ;ith usiness firms. &plain the appeal of these pro!rams as compared to that of cash dividend pro!rams from the stoc% issuer)s point of vie;. $oth stoc% repurchase and cash dividend pro!rams are mechanisms for transferrin! ecess funds from a corporation to its shareholders. Dividend pro!rams once commenced require an on!oin! cash outflo; that is difficult to reduce or terminate. 9toc% repurchase pro!rams on the other hand are structured such that a firm can control oth the timin! and the amount of the cash outflo;s. "hile a stoc% repurchase pro!ram is frequently announced there is no commitment to actually purchase the shares. This provides a lot more fleiility to the firm than a dividend pro!ram. *eedac%6 Refer to section 17.3
@8. &plain ho; cash dividends affect individual shareholders differently than an equal amount of funds spent on a repurchase. Dividends are payale to all shareholders on an equal per share asis ;ith the income taed as dividend income ;hen received. 9hareholders have no control over the timin! of this dividend income and thus no control over the timin! of their ta liaility. 0 repurchase affects only those shareholders ;ho opt to sell shares. The shareholders ;ho participate in a repurchase ;ill !enerally pay taes at the capital !ains rate ;ith the ta liaility created at the time of sale ;hich is controlled y the shareholder. 9hareholders ;ho do not participate in the repurchase pro!ram receive no cash and incur no taes. Thus a repurchase allo;s shareholders to control the timin! of their income and their related ta liaility. 0lso it should e noted that investor preferences for either dividends or capital !ains depends upon the ta la;s that are in eistence at a particular point in time. *eedac%6 Refer to section 17.3
AACSB: (eflecti!e t)in2ing Bloom's: Analysis Difficulty: ntermediate Learning Obecti!e: "#$0 Section: "#%1 &oic: Stoc2 reurc)ase
@2. :dentify some real-;orld factors ;hich mi!ht ma%e it more difficult for an individual to effectively create a homemade dividend policy. 9tudents should address factors such as taes transaction costs and investment earnin!s. :f sellin! 1 of securities is not equal to receivin! 1 of dividend income on an afterta asis then investors ;ill have a preference for one over the other. 9ellin! small amounts of securities on a frequent asis tends to result in si!nificant transaction costs ma%in! such tradin! undesirale. Receivin! dividend income today and then investin! that income for a short period of time say a year or t;o may yield less than desirale results if the interest rate availale for such investments is lo; ;hich ;ould !enerally e the case for many shareholders. Thus effectively creatin! a homemade dividend policy may not e as simple as it sounds especially for investors ;ith smaller portfolios. *eedac%6 Refer to section 17.'
AACSB: (eflecti!e t)in2ing Bloom's: Analysis Difficulty: ntermediate Learning Obecti!e: "#$0 Section: "#%1 &oic: Stoc2 reurc)ase !ersus cas) di!idend
Multiple Choice Questions
@/. The Green *iddle has declared an ? per share dividend. 9uppose capital !ains are not taed ut dividends are taed at 1/ percent. e; :R9 re!ulations require that taes e ;ithheld at the time the dividend is paid. Green *iddle stoc% sells for 71./ per share and the stoc% is aout to !o edividend. "hat ;ill the e-dividend price e# A. 38.7 $. 37.@ C. 7?.2 D. 7@./ 17-1@
Chapter 17 - Dividends and Dividend Policy
*OC 7: "#$0 Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 di!idend
&. ?'.'2 &-dividend price 71./ - K? × =1 - .1/>L 38.7
@?. Glendale Pavin! currently has 1' shares of stoc% outstandin! that sell for /8 per share. 0ssume no mar%et imperfections or ta effects eist. "hat ;ill the ne; share price e if the firm declares a 8 percent stoc% dividend# 0. 21.1' $. 2'.? C. 2/.1@ D. 2?./7 &. 8. e; price /8 =1J1.8> 2?./7
AACSB: Analytic Bloom's: Alication Difficulty: Basic *OC 7: "#$" Learning Obecti!e: "#$" Section: "#%" &oic: *+$di!idend rice
@3. The o;ners) equity accounts for $lues;ell :ndustries are sho;n here6
AACSB: Analytic Bloom's: Alication Difficulty: Basic *OC 7: "#$0 Learning Obecti!e: "#$3 Section: "#%4 &oic: Stoc2 di!idend
:f $lues;ell :ndustries declares a 1-for-/ reverse stoc% split there ;ill e J 2.17'8 1@.??/7 shares Dividend in year t;o 2/ × =1 H 1@.??/7> 2/3@3 AACSB: Analytic Bloom's: Analysis Difficulty: ntermediate *OC 7: "#$". Learning Obecti!e: "#$, Section: "#%, &oic: -omemade di!idend
18. $uilt Rite Corp. is evaluatin! an etra dividend versus a share repurchase. :n either case // ;ould e spent. Current earnin!s are .? per share and the stoc% currently sells for 22 per share. There are '/ shares outstandin!. :!nore taes and other imperfections. Iou o;n one share of stoc% in this company. :f the company issues the dividend your total investment ;ill e ;orth
