Z Industries has 125 million shares outstanding and has a marginal corporate tax rate of 35%. XYZ announces that it will use $75 million in excess cash to investors repurchase shares. Shareholders had previously assumed that XYZ would retain this excess cash permanently. The amount XYZt's share price can be expected to change upon this announcement is closest to
Z Industries has 125 million shares outstanding and has a marginal corporate tax rate of 35%. XYZ announces that it will use $75 million in excess cash to investors repurchase shares. Shareholders had previously assumed that XYZ would retain this excess cash permanently. The amount XYZt's share price can be expected to change upon this announcement is closest to
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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XYZ Industries has 125 million shares outstanding and has a marginal corporate tax rate of 35%. XYZ announces that it will use $75 million in excess cash to investors repurchase shares. Shareholders had previously assumed that XYZ would retain this excess cash permanently. The amount XYZt's share price can be expected to change upon this announcement is closest to:
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