Spend all of its excess cash on share repurchase program

Assignment Help Financial Management
Reference no: EM13881926

A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,400 and other assets of $3,500. Equity is worth $4,900. The firm has 700 shares of stock outstanding and net income of $1,450. The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?

500 shares

707 shares

307 shares

514 shares

507 shares

Reference no: EM13881926

Questions Cloud

What do you think the ex-dividend price will be : Miller, Inc., has declared a $6.30 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 10 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Miller sells for $114 per share, a..
Cost of capital estimate deviate to change the decision : FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the costs is $296,638 per year. Once in production, the bike is expected to make $202,100 per year for 10 years. The cash inflows begin at ..
Various trading strategies appear to offer non-zero alphas : Various trading strategies appear to offer non-zero alphas when we examine real world data. If indeed these alphas are positive, it could be explained by any of the following except:
Considered difficulty with regards to the CAPM : Which of the following is not considered a difficulty with regards to the CAPM?
Spend all of its excess cash on share repurchase program : A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,400 and other assets of $3,500. Equity is worth $4,900. The firm has 700 shares of stock outstanding and net income of $1,450. The firm has decided to spend ..
Market risk of project is its degree of operating leverage : One factor that can affect the market risk of a project is its degree of operating leverage, which is
A firm has market value equal to its book value : A firm has a market value equal to its book value. Currently, the firm has excess cash of $700 and other assets of $7,000. Equity is worth $7,700. The firm has 550 shares of stock outstanding and net income of $900. What will the new earnings per sha..
What is the value of the embedded call option : Assume that the 3-year 4.5% bond is callable in Year 1 at (101) and in Year 2 at par. The call rule is to call whenever the price exceeds the call price. Calculate the value of the bond with the embedded option. What is the value of the embedded call..
Purchased foreclosed house-mortgage loan with interest rate : Lucinda Lacy purchased a foreclosed house today for $105,500 by making a down payment of 15% of the purchase price and paying closing costs of: Determine manually (handwritten), by trial and error, Lucinda’s rate of return, if she owns the house for ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the firms after-tax component cost of debt

A company's 8% coupon rate, semi-annual payment, $1,000 par value bond that matures in 20 years sells at a price of $593.17. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calcula..

  Explain the default risk and liquidity premiums for bonds

The default risk and liquidity premiums for this company's bonds total 0.9 percent and are believed to be the same for all bonds issued by this company. If the average inflation rate is expected to be 5 percent for years 5, 6, and 7, what is the y..

  Simple interest on its investment accounts

First Simple Bank pays 9 percent simple interest on its investment accounts. If First Complex Bank pays interest on its accounts compounded annually, what rate should the bank set if it wants to match First Simple Bank over an investment horizon of 1..

  Purchased office equipment

On July 20, 2014, Kelli purchased office equipment at a cost of $12,000. Kelli makes the election to expense for 2014. She is self-employed as an attorney and in 2014, her business has a net income of $6000 before considering this election to expense..

  What is its dividend growth rate

If the price of Hanbags Inc. stock is $43, its required return is 20% and the last dividend paid was $3, what is its dividend growth rate?

  Brazilian real hedging with futures-futures hedging strategy

The US dollar (USD) to Brazilian real (BRL) exchange rate was 0.5793 USD/ BRL on October 21, 2010. By January 17, 2011 it had moved to 0.5934 USD/ BRL. Over the same time-period, BRL 3-month futures had moved from 0.5826 USD/ BRL. Assume the maturity..

  What is the firms current receivables balance

Fargo Memorial Hospital has annual net patient service revenues of $14,400,000. It has two major third-party payers, plus some of its patient is self-payers. The hospitals patient accounts manager estimates that 10% of the hospitals paying patients (..

  New divisor for the price-weighted index

Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $57, $315, and $114, respectively. If Baker undergoes a 3-for-2 stock split, what is the new divisor for the price-weighted index?

  The consensus forecast of security analysts

Suppose that the consensus forecast of security analysts of your favourite company is that earnings next year will be E1 = $5.00 per share. Suppose that the company tends to plow back 50% of its earnings and pay the rest as dividends.

  Did matt make a good purchase

The beta of ACE stock is 0.98 and the market''s risk-free rate is 4.0%. no dividends were paid. based on Jensen''s measure, did Matt make a good purchase

  Leverage and capital structure

Using the capitalized earnings method (EPS/RS), compute the estimated share values associated with each of the capital structures. Select the optimal capital structure on the basis of: Maximization of expected earnings per share.

  The standard deviation variance and coefficient of

1.the standard deviation variance and coefficient of variation of the daily returns for the portfolio must be

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd