Cost of Capital vs Return Promised: Capital Allocation and Shareholder Payouts

The cost of capital is slightly lower than the return promised by any deal the CEO wants to do. There are three questions to consider: 1) Should the capital be paid out to shareholders or kept within the company? 2) If paid out, should it be done through stock repurchases or dividends? 3) If the company can create more value than the paid-out dollar by keeping it, then stock repurchases are warranted. Additionally, buying stock at a significant discount from intrinsic value is a good use of capital.