Wyatt Oil Has 25 Million Shares Outstanding and Has a Marginal

question 19

Multiple Choice

Wyatt Oil has 25 million shares outstanding and has a marginal corporate tax rate of 40%.Wyatt Oil announces that it will payout $40 million in cash to investors through a special dividend.Shareholders had previously assumed that Wyatt Oil would retain this excess cash permanently.The amount that Wyatt Oil's share price can be expected to change upon this announcement is closest to:

• A)$0.56
• B)$0.64
• C)$0.96
• D)$1.56

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Definitions:

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