Problem 17.09 – HNH Corporation Constant Dividend

Fundamentals of Corporate Finance

Berk, DeMarzo, and Harford

05th Edition

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Difficulty – Medium

Calculate the price per share for HNH stock assuming that investors pay a tax on dividends but that there is no capital gains tax. Then assume that the firm will no longer pay dividends but rather repurchase stock: What is the stock price now?

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