A firm has 10 million shares outstanding with a market price of P20 per share. The firm has P25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm’s value of operations, and how many shares will remain after the repurchase?
A firm has 10 million shares outstanding with a market price of P20 per share. The firm has P25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm’s value of operations, and how many shares will remain after the repurchase?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A firm has 10 million shares outstanding with a market price of P20 per share. The firm has P25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm’s value of operations, and how many shares will remain after the repurchase?
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