Percent of cash returned to stockholders

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1. Stock buybacks really do not return cash to stockholders, because only those who sell back stock receive the cash. Is this statement true or false? Explain.

2. Between 1988 and 2008, we saw an increase in the percent of cash returned to stockholders in the form of dividends. Why?

3. Lube Oil, a chain of automobile service stations, reports net income of $100 million after depreciation of $50 million. The firm has capital expenditures of $80 million, and the noncash working capital increased from $25 to $40 million. Estimate the firm's FCFE, assuming that the firm is all equity financed.

Reference no: EM13963164

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