Question 2

Google Books Incorporated has a market value equal to its book value. Currently, the firm has excess cash of $150,000 other assets of $ 345,000 and equity valued at $ 415,000. The firm has 5,000 shares of stock outstanding and net income of $85,000. What will the new earnings per share be if the firm uses 45 percent of its excess cash to complete a stock repurchase? (Show all workings) (15 marks)