1. Rather than investing in productive long-term assets, reducing outstanding long-term debt, or increasing salaries and benefits for employees, many companies use excess available cash to repurchase a portion of their outstanding common stock on an annual basis.

Required:List several reasons a company might want to repurchase shares of its stock. In formulating your answer, consider the implications for Earnings per Share (EPS) and Return on Equity (ROE).

Note:

• EPS = Weighted Average Common Shares Outstanding / Net Income
• ROE = Average Shareholders Equity / Net Income