Question
A firm has a market value equal to its book value. Currently, the firm has excess cash of $400 and other assets of $2,600. Equity
A firm has a market value equal to its book value. Currently, the firm has excess cash of $400 and other assets of $2,600. Equity is worth $3,000. The firm has 300 shares of stock outstanding. Assume that the book value is the same as market value for the shares. a. What is the current stock price per share? (2 points) b. If the firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding? and what is the price per share after the stock repurchase is completed? (3 points) c. If the firm has decided to spend all of its excess cash as cash dividend, how many shares of stock will be outstanding? and what is the price per share after the dividend is paid off? (2 points) d. If the firm decides to do a 2-for-5 stock split, is it going to be a regular or reverse stock split? What would be the stock price and shares outstanding after the split? Thank you in advance!!!
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