A share repurchase that begins with a company communicating to shareholders a specific number of shares and a range of acceptable prices is most likely to be a(n):
A. Open market repurchase.
B. Fixed price tender offer.
C. Dutch auction.
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A companys operations analyst is evaluating a plant expansion project that is likely to be financed in part by issuing new common equity. Flotation costs are expected to be 4% of the amount of new equ
A. Ignore them,because flotation costs for common equity are likely to be nonmaterial.
B. Estimate the cost of equity capital based on a share price 4% less than the current price.
C. Determine the flotation cost attributable to this project and treat it as part of the projects initial cash outflow.
A company is considering either an open market share repurchase or a cash dividend of an equal amount. Compared to the open market share repurchase, the cash dividend is most likely to:
A. Increase a shareholders wealth by a greater amount.
B. Increase a shareholders wealth by a lesser amount.
C. Have a relative impact that depends on the tax treatment of the two alternatives.
Which of the following is most likely to increase share holders wealth?
A stock dividend.
B. A stock split.
C. A special dividend.
If a companys after-tax borrowing rate is greater than the companys earning yield when the company repurchases stock with borrowed money, going forward, the earnings per share is most likely to:
A. increase.
B. decrease.
C. Remain unchanged.