Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gamma Industries has net income of $2,700,000, and it has 915,000 shares of common stock outstanding. The company's stock currently trades at $39 a share.

Gamma Industries has net income of $2,700,000, and it has 915,000 shares of common stock outstanding. The company's stock currently trades at $39 a share. Gamma is considering a plan in which it will use available cash to repurchase 20% of its shares in the open market at the current $39 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

Step: 3

blur-text-image

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

Fundamentals Of Healthcare Finance

Authors: Louis C. Gapenski

2nd Edition

1567934757, 978-1567934755

More Books

Students also viewed these Finance questions