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Companies with excess cash often employ share repurchase plans in place of or along with cash dividends

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Companies with excess cash often employ share repurchase plans in place of or along with cash dividends. Share repurchase plans can help investors liquidate their holdings by selling their stock to the issuing company and earning from capital gains. Consider the case of Petroxy Inc.: Petroxy Inc. expects to earn $4,800,000 this year. The company currently has 870,000 shares outstanding, and the shares have a per-share market price of $18. Assuming that Petroxy's price-to-earnings (P/E) ratio remains constant and its earnings are unaffected by a share repurchase transaction, then the company's expected market price per share-if it repurchases 80,000 shares at the current market price-should be Which of these factors are considered an advantage of a stock repurchase? Check all that apply. $17.84 $25.77 $19.82 The firm might pay too high a price for the repurchased stock. The price of the firm's stock might benefit more from cash dividends than from a repurchase. When a firm distributes cash by repurchasing stock, stockholders have the option to either sell or not sell stock. $24.78