Sell to receive the desired cash income next month assume a


Friends Inc. is an all-equity firm worth $4.5 million and has 125,000 shares outstanding. The firm has announced that it will pay out $500,000 of cash dividends next month. Before the dividend announcement, the stock price was 36$ per share. A shareholder of the firm, who owns 2,000 shares, would like to receive $10,000 cash income next month. How many shares would the shareholder need to bu or sell to receive the desired cash income next month? Assume a perfect capital market.

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Financial Management: Sell to receive the desired cash income next month assume a
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