FOUNDATIONS OF FINANCE-MYFINANCELAB
10th Edition
ISBN: 9780135160619
Author: KEOWN
Publisher: PEARSON
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Question
Chapter 13, Problem 16SP
a)
Summary Introduction
To determine: The fraction of firm shares can the firm repurchase for $5 million.
b)
Summary Introduction
To determine: The earnings per share after the repurchase.
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(Stock
repurchases and earnings per
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CareMore, Inc. provides in-home medical assistance to the elderly and earned net income of
$5.4 million that it plans to use to repurchase shares of the firm's common stock, which is
currently selling for $41 a share. CareMore has 20 million shares of stock outstanding.
a. What fraction of the firm's shares can the firm repurchase for $5.4 million? (round to two
decimal places)
b. If the share repurchase has no impact on the firm's net income, what will be its earnings per
share after the repurchase? (round to four decimal places)
Your company, Ohiobucks (OB), hires an investment bank to underwrite an issue of 10 million shares of OB stock on a best-effort basis. The investment bank sells 8 million shares and charges OB $0.225 per share sold. The price of each share is $10.50. How much will the investment bank earn after the issuance?
A. $7.0 MM
B. $7.5 MM
C. $1.8 MM
D. $1.0 MM
Given that Local Care, Inc.'s stock is currently selling for $65 a share, calculate the amount of money that Elijah Pearson will make (or lose) on each of the following transactions. Assume that all transactions involve 100 shares of stock, and ignore brokerage commissions. Input all answers as positive values.
He short-sells the stock and then repurchases the borrowed shares at $85.Total of $ .
He buys the stock and then sells it some time later at $85.Total of $ .
He short-sells the stock and then repurchases the borrowed shares at $50.Total of $ .
Chapter 13 Solutions
FOUNDATIONS OF FINANCE-MYFINANCELAB
Ch. 13 - What is meant by the term dividend payout ratio?Ch. 13 - Prob. 2RQCh. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Prob. 5RQCh. 13 - Prob. 6RQCh. 13 - Prob. 7RQCh. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - Prob. 10RQ
Ch. 13 - Prob. 1SPCh. 13 - (Dividend policy and the issue of new shares of...Ch. 13 - Prob. 3SPCh. 13 - (Dividend policy and stock prices) The issue as to...Ch. 13 - (Residual dividend policy) FarmCo, Inc. follows a...Ch. 13 - (Legal restrictions on dividend payments) Describe...Ch. 13 - (Practical considerations in setting dividend...Ch. 13 - Prob. 8SPCh. 13 - Prob. 9SPCh. 13 - Prob. 10SPCh. 13 - Prob. 11SPCh. 13 - Prob. 12SPCh. 13 - Prob. 13SPCh. 13 - Prob. 14SPCh. 13 - Prob. 15SPCh. 13 - Prob. 16SPCh. 13 - Prob. 1.1MCCh. 13 - The executive vice-president in charge of finance...Ch. 13 - Prob. 2.1MCCh. 13 - Prob. 2.2MCCh. 13 - Prob. 2.3MC
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