Assume that Omicron uses the entire $50 million in excess cash to pay a special dividend.Omicron's cum-dividend price is closest to:

Question

Quizplus · Accepted Answer

If Omicron uses the entire $50 million in excess cash to pay a special dividend, then the dividend per share can be calculated as follows:

Dividend per share = Total dividend payment / Number of outstanding shares

Assuming Omicron has 2 million outstanding shares, the dividend per share would be:

Dividend per share = $50,000,000 / 2,000,000 = $25

Therefore, the cum-dividend price would be the current market price minus the dividend per share, which is:

Cum-dividend price = Current market price - Dividend per share

= $70 - $25 = $45

So the closest option is D) $45.00.

Assume That Omicron Uses the Entire $50 Million in Excess