PLO Bhd is a public listed firm mainly involved in the manufacture of precision tools and molds for the semiconductor, electrical and electronics industries. The firm has a market capitalization of RM1 billion and 40 million shares outstanding. Following the appointment of a new CEO recently, the company plans to distribute a sum of RM125 million through an open market repurchase (assume perfect capital markets).

i) Calculate the price per share of PLO Bhd prior to the repurchase.

ii) Calculate the number of outstanding shares that will be repurchased under this corporate exercise.

iii) Calculate and comment the price per share of the firm prior to and after the share repurchase transaction.

iv) Based on the information provided in the Question

(a), explain how the share repurchase conducted may transmit information about PLO Bhd to investors?

b) Explain the possible causes of shareholder-manager agency problems and provide solutions to resolve these problems.