Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gamma Industries has net income of $2,500,000, and it has 1,850,000 shares of common stock outstanding. The company's stock currently trades at $60 a share.

Gamma Industries has net income of $2,500,000, and it has 1,850,000 shares of common stock outstanding. The company's stock currently trades at $60 a share. Gamma is considering a plan in which it will use available cash to repurchase 10% of its shares in the open market at the current $60 stock price. The repurchase is expected to have no effect on net income or the company's P/E ratio. What will be its stock price following the stock repurchase? Do not round intermediate calculations. Round your answer to the nearest cent.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management For Public Health And Not For Profit Organizations

Authors: Steven A. Finkler

2nd Edition

0131471988, 978-0131471986

More Books

Students also viewed these Finance questions

Question

1. What determines the natural rate of unemployment?

Answered: 1 week ago

Question

What is the price of floating rate bond that is at its reset date?

Answered: 1 week ago