A firm has a market value equal to its book value

Assignment Help Financial Management

Reference no: EM13927891

A firm has a market value equal to its book value. Currently, the firm has excess cash of $800 and other assets of $7,200. Equity is worth $8,000. The firm has 600 shares of stock outstanding and net income of $1,566. What will the new earnings per share be if the firm uses 25 percent of its excess cash to complete a stock repurchase?

1.61

2.41

2.01

3.21

2.68

Reference no: EM13927891

Questions Cloud

Firm to value their capital budgeting projects : The flow-to-equity approach has been used by the firm to value their capital budgeting projects. The total investment cost at time 0 is $640,000. The company uses the flow-to-equity approach because they maintain a target debt to value ratio over pro..

What is the firms cost of equity : Chelsea fashions is expected to pay an annual dividend of $0.80 a share next year. the market price of the stock is $22.40 and the growth rate is 5%. what is the firm's cost of equity?

What is the incremental annual cash flow : Daily Enterprises is contemplating the acquisition of some new equipment. The purchase price is $33,000. The equipment has a 4-year life. The equipment can be leased for $9,000 a year. The firm can borrow money at 7 percent and has a 35 percent tax r..

What rop will provide a lead time service level : What is the EOQ? What ROP will provide a lead time service level of 96 percent?

A firm has a 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 $800 and other assets of $7,200. Equity is worth $8,000. The firm has 600 shares of stock outstanding and net income of $1,566. What will the new earnings per s..

What is the value of one share of this stock today : You own 200 shares of Loner, Inc. stock. The company has stated that it plans on issuing a dividend of $.20 a share one year from today and then issuing a final liquidating dividend of $1.60 a share two years from today. Your required rate of return ..

What rop would provide a stockout risk of 10 percent : Lead time also appears normally distributed with a mean of eight days and a standard deviation of one day. What ROP would provide a stockout risk of 10 percent during lead time?

What is the exchange rate : The table below gives the exchange rates between U.S. dollar, British pound and Swedish krona. What is the exchange rate between Swedish kronas and pounds?

When the amount on hand is 12 boxes : If the copy center reorders when the supply on hand is 12 boxes, compute the risk of a stockout.If a fixed interval of seven weeks instead of an ROP is used for reordering, what risk does the copy center incur that it will run out of stationery bef..

User Account

All Pages