How will harris stock price change upon this announcement

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Reference no: EM132075084

Harris Corporation has $250 million in cash, and 100 million shares outstanding.

Suppose the corporate tax rate is 35%, and investors pay no taxes on dividends, capital gains, or interest income. Investors had expected Harris to pay out the $250 million through a share repurchase.

Suppose instead that Harris announces it will permanently retain the cash, and use the interest on the cash to pay a regular dividend.

If there are no other benefits of retaining the cash, how will Harris' stock price change upon this announcement?

Reference no: EM132075084

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