Question 4 Brightland Inc. has a market value equal to its book value. Currently, the firm has excess cash of $1,500, other assets of $5,800, and equity valued at $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 percent of its excess cash to complete a stock repurchase? Question 5 In the absence of market imperfections and taxes, stock repurchases are same as cash dividends. How does this change in real world circumstances and what effect does a stock repurchase announcement have on stock price?
Question 4 Brightland Inc. has a market value equal to its book value. Currently, the firm has excess cash of $1,500, other assets of $5,800, and equity valued at $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 percent of its excess cash to complete a stock repurchase? Question 5 In the absence of market imperfections and taxes, stock repurchases are same as cash dividends. How does this change in real world circumstances and what effect does a stock repurchase announcement have on stock price?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question 4
Brightland Inc. has a market value equal to its book value. Currently, the
firm has excess cash of $1,500, other assets of $5,800, and equity valued
at $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 percent
of its excess cash to complete a stock repurchase?
Question 5
In the absence of market imperfections and taxes, stock repurchases are same
as cash dividends. How does this change in real world circumstances and what
effect does a stock repurchase announcement have on stock price?
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