Question
A firm has 5 million shares outstanding with a market price of $35 per share. The firm has $40 million in extra cash (short-term investments)
A firm has 5 million shares outstanding with a market price of $35 per share. The firm has $40 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations after the repurchase? Enter your answer in millions. For example, an answer of $1.23 million should be entered as 1.23, not 1,230,000. Round your answer to two decimal places.
$ million
How many shares will remain after the repurchase? Round your answer to the nearest whole number.
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Step: 1
To calculate the firms value of operations after the repurchase we first need to determine the value of the stock repurchase The firm has 40 million i...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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Corporate Finance A Focused Approach
Authors: Michael C. Ehrhardt, Eugene F. Brigham
4th Edition
1439078084, 978-1439078082
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