PRIN.OF CORPORATE FINANCE
PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 16, Problem 20PS

Repurchases and EPS Many companies use stock repurchases to increase earnings per share. For example, suppose that a company is in the following position:

Chapter 16, Problem 20PS, Repurchases and EPS Many companies use stock repurchases to increase earnings per share. For

The company now repurchases 200,000 shares at $200 a share. The number of shares declines to 800,000 shares and earnings per share increase to $12.50. Assuming the price–earnings ratio stays at 20, the share price must rise to $250. Discuss.

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What Are Stock Buybacks and Why Are They Controversial?; Author: TD Ameritrade;https://www.youtube.com/watch?v=2O4bmcliaog;License: Standard youtube license