Brightland Inc. has a market value equal to its book value. Currently, the firm has excess cash of $1,500, other assets of $5,800, and equity valued at $5,000. The firm has 250 shares of stock outstanding and net income of $500. What will the new earnings per share be if the firm uses 30 percent of its excess cash to complete a stock repurchase?
Brightland Inc. has a market value equal to its book value. Currently, the firm has excess cash of $1,500, other assets of $5,800, and equity valued at $5,000. The firm has 250 shares of stock outstanding and net income of $500. What will the new earnings per share be if the firm uses 30 percent of its excess cash to complete a stock repurchase?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 6MC
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Brightland Inc. has a market value equal to its book value. Currently, the
firm has excess cash of $1,500, other assets of $5,800, and equity valued
at $5,000. The firm has 250 shares of stock outstanding and net income of
$500. What will the new earnings per share be if the firm uses 30 percent
of its excess cash to complete a stock repurchase?
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