A company with 20 million shares outstanding decides to repurchase 2 million shares at the prevailing market price

of 30 per share. At the time of the buyback, the company reports total assets of 850 million and total liabilities of

250 million. Following the share buyback, what is the company's new book value per share? (4 pts)

Answer:________________________

2. Tenaga Berhad, Inc., plans to borrow Malaysian ringgit (MYR)12 million, which it will use to repurchase shares. The

following information is given:

Share price at time of share repurchase = MYR60

Earnings after tax = MYR6.6 million

EPS before share repurchase = MYR3

Price/Earnings (P/E) = MYR60/MYR3 = 20

Earnings yield (E/P) = MYR3/MYR60 = 5%

Shares outstanding = 2.2 million

Planned share repurchase = 200,000 shares

1) Calculate the EPS after the share repurchase, assuming the after-tax cost of borrowing is 5%. (3 pts)

Answer__________________

2) Calculate the EPS after the share repurchase, assuming the companys borrowing rate increases to 6% because of

the increased financial risk of borrowing the MYR12 million. (3 pts)

Answer_____________________