Financial accounting A firm has a market value equal to its book value.Currently, the firm has excess cash of $11,000, other assetsof $6,900, and equity of $8,000. The firm has 800 shares ofstock outstanding and a net income of $1,000. The firm hasdecided to spend half of its excess cash on a sharerepurchase program. How many shares of stock will beoutstanding after the stock repurchase is completed?a. 765 sharesb. 785 sharesc. 725 sharesd. 745 sharese. 705 shares

Step 1: Stock RepurchaseRepurchase of stock is when a company has excess cash and uses it to…

Answered: A firm has a market value equal to its…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 12P

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A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,100, other assets of $6,900, and equity of $8,000. The firm has 800 shares of stock outstanding and a net income of $1,000. The firm has decided to spend half of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed? a. 765 shares b. 785 shares c. 725 shares d. 745 shares e. 705 shares
A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,800 and other assets of $5,700. Equity is worth $7,500. The firm has 750 shares of stock outstanding and net income of $1,500. The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?
A firm has a market value equal to its book value. Currently, the firm has excess cash of $500 and other assets of $8,000. Equity is worth $8,500. The firm has 850 shares of stock outstanding and net income of $1,200. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?
A firm has a market value equal to its book value. Currently, the firm has $500,000 of excess cash, $4,500,000 in other assets, $1,000,000 in liabilities, $40,000 in common stock at $1 par, $0 in retained earnings, and $30,000 in net income. Assume that the firm uses all of its excess cash to repurchase some of its shares outstanding. How many shares will be outstanding after the repurchases are completed? (Round, if necessary, your final answer to the whole number).
Brightland Inc. has a market value equal to its book value. Currently, thefirm has excess cash of $1,500, other assets of $5,800, and equity valuedat $5,000. The firm has 250 shares of stock outstanding and net income of$500. What will the new earnings per share be if the firm uses 30 percentof its excess cash to complete a stock repurchase?
Blasco's has a market value equal to its book value. Currently, the firm has excess cash of €1,332, other assets of €11,674, and equity of €7,200. The firm has 1200 shares outstanding and net income of €838. Blasco's has decided to spend one-third of its excess cash on a share repurchase program. How many shares will be outstanding after the share repurchase is completed? Show your steps. Jefferson Refining is issuing a rights offering wherein every shareholder will receive one right for each share of equity they own. The new shares in this offering are priced at £21 plus 3 rights. The current market value of the equity is £75 million with 3 milion shares outstanding. What is the value of one right? Show your steps. If an IPO is underpriced then the: investors in the IPO are generally unhappy with the underwriters. issue is less likely to sell out. share price will increase on the first day of trading. issuing firm is guaranteed to be…
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A firm has a market value equal to its book value, excess cash of $1,000, and equity worth $20,800. The firm has 6,000 shares of stock outstanding and net income of $31,200. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase? $4.10 $4.68 $6.56 $5.46
The equity of Blooming Roses has a total market value of $16,000. Currently, the firm has excess cash of $1,200 and net income of $15,400. There are 750 shares of stock outstanding. What will be the percentage change in the stock price per share if the firm pays out all of its excess cash as a cash dividend?
The shares of a company trade today for $37. The company is fairly valued at this current price. There are 39 million shares outstanding prior to the repurchase. The company has announced that it intends to spend $265 million on an open market repurchase. Assume that the company is able to repurchase shares at a price of $39.00. Assume that the company is all-equity financed. What fraction of shares does the company repurchase? What is the share price after the repurchase?
The Dunn Corporation is planning to pay dividends of $540000. There are 270000 shares outstanding, and earnings per share are $4. The stock should sell for $48 after the ex-dividend date. If, instead of paying a dividend, the firm decides to repurchase stock,a. What should be the repurchase price? b. How many shares should be repurchased? c. What if the repurchase price is set below or above your suggested price in part a? d. If you own 100 shares, would you prefer that the company pay the dividend or repurchase stock? a. 3/10, net 45 b. 3/15 net 30 c. 3/15 net 60 d.2/10 net 45
A firm has a market value equal to its book value. Currently, the firm has excess cash of $7,000 and other assets of $21,000. Equity is worth $28,000. The firm has 600 shares of stock outstanding and net income of $2,400. What will the stock price per share be if the fim pays out Its excess cash as a cash dividend?

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