Merrilee owns 500 of the 50,000 outstanding shares of TJ's Candies. The stock is currently valued at $30 per share. TJ's is considering either a $5 special dividend or a stock repurchase. How many shares would TJ's need to repurchase if the goal is to spend an amount equivalent to the total cost of the special dividend?

Question

Quizplus · Accepted Answer

The total cost of the special dividend would be $5 per share times 50,000 shares, which equals $250,000. To spend an equivalent amount on a stock repurchase, TJ's would need to divide the total amount ($250,000) by the current stock price ($30 per share), resulting in approximately 8,333 shares (250,000 / 30 = 8,333.33).

Merrilee Owns 500 of the 50,000 Outstanding Shares of TJ's