In 2014, ABC has net income of P5,000,000, and it has 2,000,000 shares of common stock outstanding. The company’s stock currently trades at P30 a share. For the year 2015, AKBAY is planning to use its available cash to repurchase 50% of its shares in the market. The planned repurchase has no effect in the net income or the company’s Price-Earnings ratio. What is the expected stock price after the stock repurchase of ABC?
In 2014, ABC has net income of P5,000,000, and it has 2,000,000 shares of common stock outstanding. The company’s stock currently trades at P30 a share. For the year 2015, AKBAY is planning to use its available cash to repurchase 50% of its shares in the market. The planned repurchase has no effect in the net income or the company’s Price-Earnings ratio. What is the expected stock price after the stock repurchase of ABC?
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
Related questions
Question
In 2014, ABC has net income of P5,000,000, and it has 2,000,000 shares of common stock outstanding. The company’s stock currently trades at P30 a share. For the year 2015, AKBAY is planning to use its available cash to repurchase 50% of its shares in the market. The planned repurchase has no effect in the net income or the company’s Price-Earnings ratio. What is the expected stock price after the stock repurchase of ABC?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education