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Omicron Technologies has $50 million in excess cash and no debt.The firm expects to generate additional free cash flows of $40 million per year in subsequent years and will pay out these future free cash flows as regular dividends.Omicron's unlevered cost of capital is 10% and there are 10 million shares outstanding.Omicron's board is meeting to decide whether to pay out its $50 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock.
-Assume that you own 4000 shares of Omicron stock and that Omicron uses the entire $50 million to pay a special dividend.Suppose you are unhappy with Omicron's decision and would have preferred that Omicron used the excess cash to repurchase stock.Detail exactly how you could undo the dividend in a way that will provide you with the same combination of cash and stock that you would have received if Omicron had not paid the special dividend.
Lymphatic Capillary
Beginning of the lymphatic system of vessels; lined with flattened endothelium lacking a basement membrane.
Squamous Cells
Flat, scale-like epithelial cells that make up the outer layer of the epidermis in skin and also line several body cavities.
Overlapping
The partial covering or extension of one object over another, especially in anatomical or structural contexts.
Mucosal Associated Lymphatic Tissues
Clusters of lymphoid tissue in mucosal membranes throughout the body that protect against pathogens.
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