Tydek Inc. just lost a major lawsuit and its stock price dropped by 40% to $6. There
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Tydek Inc. just lost a major lawsuit and its stock price dropped by 40% to $6. There are 3.5 million shares outstanding which are currently selling at their book value of $10. The company has $5 million in cash readily available. The CFO feels the decline in price is temporary and the firm’s stock is an excellent investment at this time. If Tydek spends the entire $5 million on its own stock and the market-to-book–value ratio returns to its former level, how much more will each remaining share be worth than it was before the temporary price decline?
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