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Question
Neonia, Co. has a policy of returning a minimum of 25 percent of earnings to shareholders every year through dividend issues and open-market stock repurchases. In each quarter this year, the company earned $0.25 per share. In each of the first three quarters, the company paid a regular cash dividend of $0.05 per share. The company has 2 million shares of common stock outstanding. What combination of dividends and stock repurchases could the company's board approve to meet their target payout percentage?A) A regular cash dividend of $0.05
B) A regular cash dividend of $0.05 per share and an open-market stock repurchase of $100,000 in stock
C) A regular cash dividend of $0.05 per share and an open-market stock repurchase of $400,000 in stock
D) A regular cash dividend of $0.05 per share and an open-market stock repurchase of 500,000 in stock
Answer
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Related questions
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The claim lenders' hold on cash flows in a company with outstanding risky debt is often thought of as:
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Bifive Homes, Inc., is a developer of planned residential communities. It has entered into an option contract with a land owner outside Austin, Texas. It will pay the land owner $100,000 for the option to buy the land in two years at a price of $20 million. During that time Bifive Homes will evaluate population and real estate trends in Austin. Its plan is to buy the land if real estate prices in Austin increase enough that developing the land would be worth more than the $20 million price. The $20 million purchase price resembles:
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A) True
B) False
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Consider a call option on a stock with a strike price of $60. If the stock price at expiration is $50, the payoff from the call option is $10.
A) True
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