A Firm Has $250,000 to Spend on Either a One-Time

question 18

Multiple Choice

A firm has $250,000 to spend on either a one-time special dividend or on a share repurchase program.If the share repurchase is selected,then the firm's:

• A) value will decrease just as if the dividend option had been selected.
• B) balance sheet will be unaffected and the share price will remain constant.
• C) equity balance will be reduced by less than it would have been under the dividend option.
• D) shareholders will receive less value than under the dividend option.

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Definitions:

Ideal Standard

A benchmark for optimal efficiency under perfect operating conditions, used in variance analysis to set performance goals.

Ideal Level

A term that can refer to the optimal state or condition for a specific metric or operation within a business or system, aiming for efficiency and effectiveness.

Normal Level

A baseline or standard level of activity, production, or operation, considered typical or expected under normal circumstances.

Standard Production Time

The amount of time that should reasonably be expected to manufacture a product under normal conditions.