QUESTION 4 (25 MARKS) Ingram Micro Berhad currently has an enterprise value of RM300,000,000 and RM75,000,000 in excess cash. Ingram Micro is a debt free firm with 7,500,000 shares outstanding. Suppose Ingram uses its excess cash to repurchase shares. After the share repurchase, news released and stated that repurchase will change Ingrams enterprise value to either RM450,000,000 or RM150,000,000.

(a) Compute Ingrams share price prior to the share repurchase.(2 marks) (b) Compute (i) Ingrams share price after the repurchase if its enterprise value goes up. (ii) Ingrams share price after the repurchase if its enterprise value declines.(6 marks)

(c) Suppose Ingram waits until after the news released to public before Ingram exercise share repurchase, estimate

(i) Ingrams share price after the repurchase if its enterprise value goes up. (ii) Ingrams share price after the repurchase if its enterprise value declines.(6 marks)

(d) Suppose Ingram management expects good news to be announced. Based on your answers to parts (b) and (c), if management desires to maximize Ingrams ultimate share price. Decide whether they will undertake the repurchase before or after the news releases. Justify when would management undertake the repurchase if they expect bad news to about to release.(6 marks)

(e) Given your answer to part (d), explain the effect that you would expect an announcement of a share repurchase to have on the stock price.(5 marks) [TOTAL MARKS: 25 MARKS]