Firm B has a net income of $2 million and has 1 million shares of common stocks outstanding. Firm B’s shares currently trade at $32 per share. The management is planning to use available cash to purchase 20% of Firm B’s shares in the open market. The repurchase is expected to have no effect on either net income or
Firm B has a net income of $2 million and has 1 million shares of common stocks outstanding. Firm B’s shares currently trade at $32 per share. The management is planning to use available cash to purchase 20% of Firm B’s shares in the open market. The repurchase is expected to have no effect on either net income or
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Firm B has a net income of $2 million and has 1 million shares of common stocks outstanding. Firm B’s shares currently trade at $32 per share. The management is planning to use available cash to purchase 20% of Firm B’s shares in the open market. The repurchase is expected to have no effect on either net income or Firm B’s P/E ratio. What will be the share price of Firm B following the share repurchase?
After 5 to 1 share split, Firm S paid a dividend of $0.75 per share, which represents 9 percent increase over last year’s pre-split dividend. What was last year’s dividend per share?
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