Assume that you own 2500 shares of Omicron stock and that Omicron uses the entire $50 million to repurchase shares.Suppose you are unhappy with Omicron's decision and would prefer that Omicron used the excess cash to pay a special dividend.The number of shares that you would have to sell in order to receive the same amount of cash as if Omicron paid the special dividend is closest to:

Question

Quizplus · Accepted Answer

To find the number of shares to sell, calculate the cash per share from the $50 million repurchase. If Omicron has 10 million shares, the cash per share is $5 ($50 million / 10 million shares). To get the same cash as a dividend, sell 2500 shares * $5 = $12,500 worth of shares. At $50 per share, sell $12,500 / $50 = 250 shares. The closest option is 275.

Assume That You Own 2500 Shares of Omicron Stock and That