How many shares will remain after the repurchase

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Dividend Payout

The Wei Corporation expects next year's net income to be $10 million. The firm's debt ratio is currently 50%. Wei has $15 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual distribution model (assuming all payments are in the form of dividends), how large should Wei's dividend payout ratio be next year? Round your answer to two decimal places.

Stock Repurchase

A firm has 5 million shares outstanding with a market price of $35 per share. The firm has $30 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations after the repurchase? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.

$_______ million

How many shares will remain after the repurchase? Round your answer to the nearest whole number.

______shares

Reference no: EM132053020

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