AMC Corporation currently has an enterprise value of 5350 million and 5110 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMC uses its excess cash to repurchase shares. Aner the share repurchase, news will come out that will change AMC's enterprise value to either 5550 million or 5150 milion a. What is AMC's share price prior to the share repurchase? b. What is AMC's Share price atter the repurchase it is enterprise value goes up? What is AMC's share price after the repurchase if its enterprise value declines? c. Suppose AMC was until after the news comes out to do the share repurchase. What is AMC's share price after the repurchase it is enterprise value goes up? What is AMC's share price after the repurchase its enterprise value declines? d. Suppose AMC management expects good news to come out Based on your answers to parts (D) and (c) t management desires to maximize AMC's ultimato share price wil they undertake the repurchase before or after the news comes out? When would management undertake the repurchase if they expect bad news to come out? Given your answer to (d) what effect would you expect an announcement of a share repurchase to have on the stock price? Why? 2. What is AMC's share price prior to the share repurchase? AMC share prie pror to the share repurchase is $(Round to the nearest cent) b. What is AMC's share price after the repurchase if its enterprise value goes up? What is AMC's share price after the repurchase its enterprise value declines? AMC's share price after the repurchase it is enterprise value goes upis s. Round to the nearest cent) AMC Share price after the repurchase it is enterprise value declines is s. (Round to the nearest cent.) c. Suppose AMC wats until after the news comes out to do the share repurchase. What is AMC's share price after the repurchase it is enterprise value goes up? What is AMC's share price after the repurchase it is enterprise value declines? IT AMC waits until after the news comes out to do the share repurchase, the share price after the repurchase it is enterprise value 90s up is. (Round to the nearest cont.) Ir AMC waits until after the news comes out to do the share repurchase the share price after the repurchase if its enterprise valse declines is s (Round to the nearest cent) 1. Suppose AMC management expects pood news to come out Based on your answers to parts D) and (c), if management desires to maximize AMC's ultmate share price will they undertake the repurchase before or after the news comes out? When would management undertake the repurchase they spect bad news to come out? To maximize its share price, AMC will prefer to repurchase shares (Select the best choice below) O A. Before good news and aller bad neras comes out. OB. Before other good or bad news comes out OC. After good news and before bad nous comes out OD. Aber eher good or bad news comes out Given your answer to (di, what effect would you expect an announcement of a share purchase to have on the stock price? Why? (Select the best choice below) An announcement of a share repurchase imples that management expects bad news to come out or that any good news has already come out, both of which could have a positive impact on the stock price O An announcement of a share repurchase impies that management expects good news to come out or that any bad news has already come out, both of which could have a positive impact on the stock price |