The Down Towner has a market value balance sheet as shown below. The firm currently has 12,000 shares of stock outstanding and net income of $17,500. Market Value Balance Sheet $ 14,300 Debt 215,460 Equity $229,760 Total $ 77,960 151,800 Excess cash Other assets $229,760 Total The firm has decided to repurchase 10 percent of its outstanding stock at the current market price and fund that purchase with new debt. After the repurchase there will be shares outstanding at a price per share of Multiple Choice 10,200; $11.50 10,200; $12.65 10,800; $12.65 10,800; $11.50 10,800, $14.05
The Down Towner has a market value balance sheet as shown below. The firm currently has 12,000 shares of stock outstanding and net income of $17,500. Market Value Balance Sheet $ 14,300 Debt 215,460 Equity $229,760 Total $ 77,960 151,800 Excess cash Other assets $229,760 Total The firm has decided to repurchase 10 percent of its outstanding stock at the current market price and fund that purchase with new debt. After the repurchase there will be shares outstanding at a price per share of Multiple Choice 10,200; $11.50 10,200; $12.65 10,800; $12.65 10,800; $11.50 10,800, $14.05
Chapter14: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 2STP
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