Question
AMC Corporation currently has an enterprise value (EV) of $350 million and $110 million in excess cash. The firm has 10 million shares outstanding and
AMC Corporation currently has an enterprise value (EV) of $350 million and $110 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMC uses its excess cash to repurchase shares. After the share repurchase, news will come out that will change AMC's enterprise value to either $550 million or $150 million. Suppose AMC waits until after the news comes out to do the share repurchase.
What would AMC's share price be after the repurchase if its enterprise value goes up?
What would AMC's share price be after the repurchase if its enterprise value declines?
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Fundamentals Of Multinational Finance
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
1st Edition
0201844842, 978-0201844849
