In 2014, ABC has net income of P5,000,000, and it has 2,000,000 shares of common stock outstanding. The company’s stock currently trades at P30 a share. For the year 2015, AKBAY is planning to use its available cash to repurchase 50% of its shares in the market. The planned repurchase has no effect in the net income or the company’s Price-Earnings ratio. What is the expected stock price after the stock repurchase of ABC?

In 2014, ABC has net income of P5,000,000, and it has 2,000,000 shares of common stock outstanding. The company’s stock currently trades at P30 a share. For the year 2015, AKBAY is planning to use its available cash to repurchase 50% of its shares in the market. The planned repurchase has no effect in the net income or the company’s Price-Earnings ratio. What is the expected stock price after the stock repurchase of ABC?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter14: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 12P

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