Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. a stock is currently trading for $32. the company

A stock is currently trading for $32. The company has a price–earnings multiple of 10. There...

50.1K

Verified Solution

Question

Finance

A stock is currently trading for $32. The company has aprice–earnings multiple of 10. There are 100 million sharesoutstanding. Your model indicates that the stock is actually worth$42. The company announces that it will use $350 million torepurchase shares.

  1. After the repurchase, what is the value of the stock, accordingto your model? Do not round intermediate calculations. Round youranswer to the nearest cent.

    $  

  2. After the repurchase, what is the actual price–earnings multipleof the stock? Do not round intermediate calculations. Round youranswer to two decimal places.

  3. If the company had used the $350 million to pay a cash dividendinstead of doing a repurchase, how would the value of the stockhave changed, according to your model? Do not round intermediatecalculations. Round your answer to the nearest cent.

    The market value of the stock is now $   .

  4. If the company had used the $350 million to pay a cash dividendinstead of doing a repurchase, what would be the actualprice–earnings multiple after the dividend? Do not roundintermediate calculations. Round your answer to two decimalplaces.


this is all thats given

Answer & Explanation Solved by verified expert
4.2 Ratings (531 Votes)
A Value of stock after repurchase No of shares repurchased Amount utilised Market price per share 350 million 32 10937500 No of shares outstanding after repurchase 100000000 10937500 89062500    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

1) Which of the following is FALSE regarding nucleotides? Select one: a. They polymerize by linking the...

Biology
Q

So, please explain what monomers and polymers are, and give examples of these for carbohydrates, nucleic...

Medical Sciences
Q

Your task is to take the above code, and insert comments (using the “%” symbol)...

Mechanical Engineering
Q

Worm Mel2 gene products are deposited into the egg by the mother and are required...

Biology
Q

CoQ is O involved in ATP synthesis an integral membrane protein involved in redox reaction...

Biology
Q

Unpolarised light is incident on a plane transparent medium If the reflected and refracted rays...

Physics
Q

On observing light from three different stars P Q and R it was found that...

Physics
Q

Part I Imagine you are hired to consult on different types of organizational structures for...

Algebra
Q

7. Use the following information to decide if you would recommend your clients buy STU...

Accounting
Q

The first step in designing an accounting system is the creation of the general journal....

Accounting
Q

CM Enterprises estimates that it takes, on average, three days for customers payments to arrive,...

Finance
Q

Question 1 Define the term self-regulation. Discuss the advantages and disadvantages of self regulation compared...

Finance