Question

In the presence of personal tax, explain how cash dividends affect individual shareholders differently than stock repurchases.

Answer 1

The summary of the given statement is summarized throughout the below segment.

Step-by-step explanation:

Cash dividend declared:

• The cash payment will be made by stakeholders as either revenue, as well as the company's stock decreases through the equal amount of payment announced each unit.
• Consequently, the 'Modigliani and Miller' approach does not result throughout almost every gains or loss to particular stockholders

Buyback of Shares:

• Throughout this scenario, the Business acquires up later the current owners' personal or existing interests.
• Therefore that on the day of purchase, stockholders receive the identical payment.