FIN 620 Module 4 Group 1 Task 8 Share Repurchasing (UMUC)
ACME Iron has $5,000,000 of capital consisting of cash and net income. An option for the capital is to repurchase shares of company stock. This paper will look at the effect of a share repurchase, including the number of shares outstanding after the share repurchase, the effect on the capital structure of ACME Iron and how the repurchase will be interpreted in the marketplace. As an alternative use of the $5,000,000 in capital, declaring a dividend will be evaluated. Finally, the pros and cons of both share repurchase and declaring a dividend will be evaluated, with a final recommendation to move forward with one option will be made.
Discussion and Analysis