Cisoft is a highly profitable technology firm that currently has $2 billion in cash. The firm has
Question:
Cisoft is a highly profitable technology firm that currently has $2 billion in cash. The firm has decided to use this cash to repurchase shares from investors, and it has already announced these plans to investors. Currently, Cisoft is an all-equity firm with 2 billion shares outstanding. These shares currently trade for $20 per share. Cisoft has issued no other securities except for stock options given to its employees. The current market value of these options is $6 billion.
a. What is the market value of Cisoft’s non-cash assets?
b. With perfect capital markets, what is the market value of Cisoft’s equity after the share repurchase?
What is the value per share?
AppendixLO1
Step by Step Answer:
Corporate Finance The Core
ISBN: 9781292431611
5th Global Edition
Authors: Jonathan Berk, Peter DeMarzo