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?

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter13: Corporations: Organization, Stock Transactions, And Dividends

Section: Chapter Questions

Problem 4CP

See similar textbooks

Similar questions

See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco repurchases 1.9 million shares each year from 2016 to 2019. What would be its earnings per share in 2019? (Assume Mydeco pays for the shares using its available cash and that Mydeco earns no interest on its cash balances.)
Beta Industries has net income of $2,000,000 and it has 1,000,000 shares of common stock outstanding. The company’s stock currently trades at $32 a share. Beta is considering a plan in which it will use available cash to repurchase 20% of its shares in the open market. The repurchase is expected to have no effect on either net income or the company’s P/E ratio. What will be its stock price following the stock repurchase?
Gamma Industries has net income of $1,100,000, and it has 1,355,000 shares of common stock outstanding. The company's stock currently trades at $35 a share. Gamma is considering a plan in which it will use available cash to repurchase 30% of its shares in the open market at the current $35 stock price. The repurchase is expected to have no effect on net income or the company's P/E ratio. What will be its stock price following the stock repurchase? Do not round intermediate calculations. Round your answer to the nearest cent.
Gamma Industries has net income of $3,800,000, and it has1,490,000 shares of common stock outstanding. The company’s stock currently trades at $67a share. Gamma is considering a plan in which it will use available cash to repurchase 10%of its shares in the open market at the current $67 stock price. The repurchase is expectedto have no effect on net income or the company’s P/E ratio. What will be its stock pricefollowing the stock repurchase?
Company B has a net incme $2million and has 1 million shares. the company is considering a plan to repurchased 20% of its shares in open market. share price is trading at $32 per share. Currently the repurchased is expected to have no effect on its net income and PE ratio. what will be the stock pricefollowing the stock repurchased?
Alphabet (GOOGL) has yet to pay a dividend, but in spring 2018 it announced it would repurchase $8.5 billion worth of shares over the year. (Actually, the exact amount was $8,589,869,056-known as a "perfect" number because it is equal to the sum of its divisors). If the amount spent on share repurchases were expected to grow by 6.6% per year, and Alphabet's equity cost of capital is 7.9%, estimate Alphabet's market capitalization. If Alphabet has 710 million shares outstanding, what stock price does this correspond to? The share price is $ (Round to the nearest cent.) BECOM
Pharoah, Inc., paid a dividend of $4.25 last year. The company's management does not expect to increase its dividend in the foreseeable future. If the required rate of return is 17.0 percent, what is the current value of the stock? (Round answer to 2 decimal places, e.g. 15.25.) Current value
In 2014, Gap completed $1.5 billion in share buybacks, and its stock went up by 6%. Which of the following is a reason stock prices go up after the announcement of a stock buyback? a. Signaling b. Anti-Dilution c. Value Creation d. Taxes
Nynet, Inc., paid a dividend of $3.92 last year. The company's management does not expect to increase its dividend in the foreseeable future. If the required rate of return is 14.5 percent, what is the current value of the stock? (Round answer to 2 decimal places, e.g. 15.25.) Current value $
Love Inc. believes that at its current share price of P16.00 the firm is undervalued. Makeover plans to repurchase 2.4 million of its 20 million shares outstanding. The Po Inc.’s managers expect that they can repurchase the entire 2.4 million shares at the expected equilibrium price after the repurchase. The Love Inc.’s current earnings are P44,000,000. What is the expected per share market price after repurcharse?
Tucker’s National Distributing has a current market value of equity of $10,665. Currently, the firm has excess cash of $640, total assets of $22,400, net income of $3,210, and 500 shares of stock outstanding. Tucker’s is going to use all of its excess cash to repurchase sharesof stock. What will the stock price per share be after the stockrepurchase is completed?
(b) Nik Syak Dental Berhad has net income of RM3,000,000 and it has 2,000,000 outstanding common shares. The company's share currently trades at RM45 a share. Nik Syak is considering a plan where it will use available cash to repurchase 30 percent of its shares in the open market. The repurchase is expected to have no effect on either net income or the company's P/E ratio. Calculate the firm's new share price.