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What is the price of a share of hnh? stock

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Reference no: EM132710133

The HNH Corporation will pay a constant dividend of $2.50 per? share, per? year, in perpetuity. Assume all investors pay a 25% tax on dividends and that there is no capital gains tax. The cost of capital for investing in HNH stock is 12%.

a. What is the price of a share of HNH? stock?

b. Assume that management makes a surprise announcement that HNH will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of a share of HNH stock? now?

Reference no: EM132710133

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