Homework answers / question archive / Built Rite Corp is evaluating an extra dividend versus a share repurchase

Built Rite Corp is evaluating an extra dividend versus a share repurchase

Finance

Share With

Built Rite Corp is evaluating an extra dividend versus a share repurchase. In either case, $5,500 would be spent. Current earnings are $1 per share, and the stock currently sells for $27 per share. There are 2,500 shares outstanding. Ignore taxes and other imperfections. You own one share of stock in this company. If the company issues the dividend, your total investment will be worth ____ as compared to ____ if the company opts for a share repurchase. $26; $27 $27; $26 $24.80; $27. $23; $33 $27; $27

The correct answer is 27,27, but why 27 if there is a stock dividend? The price/stock should goes down