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Redo Problem 21, but assume that Kay must pay a corporate tax rate of 35%, and investors pay no 1 answer below » Redo Problem 21, but assume that Kay must pay a corporate tax rate of 35%, and investors pay no taxes. Harris Corporation has $250 million in cash, and 100 million shares outstanding. Suppose the corporate tax rate is 35%, and investors pay no taxes on dividends, capital gains, or interest income. Investors had expected Harris to pay out the $250 million through a share repurchase. Suppose instead that Harris announces it will permanently retain the cash, and use the interest on the cash to pay a View complete question » Redo Problem 21, but assume that Kay must pay a corporate tax rate of 35%, and investors pay no taxes. Harris Corporation has $250 million in cash, and 100 million shares outstanding. Suppose the corporate tax rate is 35%, and investors pay no taxes on dividends, capital gains, or interest income. Investors had expected Harris to pay out the $250 million through a share repurchase. Suppose instead that Harris announces it will permanently retain the cash, and use the interest on the cash to pay a regular dividend. If there are no other benefits of retaining the cash, how will Harris’ stock price change upon this announcement? View less » Sep 17 2015 01:55 PM
