Yale Corporation has a value of operations equal to P2,100, short-term investments of P100, debt of P200, and 100 shares of stock.
Yale Corporation has a value of operations equal to P2,100, short-term investments of P100, debt of P200, and 100 shares of stock.
Chapter14: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 2STP
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Question
Yale Corporation has a value of operations equal to P2,100, short-term investments of P100, debt of P200, and 100 shares of stock.
QUESTIONS:
a. What is Yale's estimated intrinsic stock price?
b. If Yale's converts its short-term investments to cash and pays a total of P100 in dividends, what is the resulting estimated intrinsic stock price?
c. If Yale converts its short-term investments to cash and repurchases P100 of its stock, what is the resulting estimated intrinsic stock price and how many shares remain outstanding?
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