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A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,000 and other assets of $6,000. Equity
A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,000 and other assets of $6,000. Equity is worth $18,000. The firm has 700 shares of stock outstanding and net income of $1,200. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?
Select one:
a. $1.20
b. $1.50
c. $1.86
d. $2.00
e. $2.40
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