Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a stock is currently trading for $33. the company

A stock is currently trading for $33. The company has a priceearnings multiple of 10....

50.1K

Verified Solution

Question

Accounting

A stock is currently trading for $33. The company has a priceearnings multiple of 10. There are 100 million shares outstanding. Your model indicates that the stock is actually worth $38. The company announces that it will use $350 million to repurchase shares.

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

    $

  2. After the repurchase, what is the actual priceearnings multiple of the stock? Do not round intermediate calculations. Round your answer to two decimal places.

  3. If the company had used the $350 million to pay a cash dividend instead of doing a repurchase, how would the value of the stock have changed, according to your model? Do not round intermediate calculations. 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 dividend instead of doing a repurchase, what would be the actual priceearnings multiple after the dividend? Do not round intermediate calculations. Round your answer to two decimal places.

Answer & Explanation Solved by verified expert
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: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students