Problema firm has a market value equal to its book value, Ask an Expert

Finance

Problem:

A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,000 and other assets of $6,000. Equity is worth $18,000. The firm has 700 shares of stock outstanding and net income of $1,200.

Required:

Question: What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?

Select one:

$1.20
$1.50
$1.86
$2.00
$2.40

Note: Provide thorough explanation of the given question.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91174274

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