A Kinston Firm Has a Market Value Equal to Its

question 254

Multiple Choice

A Kinston firm has a market value equal to its book value. Currently, the firm has excess cash of $800 and other assets of $4,200. Equity is worth $5,000. The firm has 200 shares of stock outstanding and net income of $350. What will the new earnings per share be if the firm uses all its excess cash to complete a stock repurchase?

• A) $1.51
• B) $1.75
• C) $1.96
• D) $2.00
• E) $2.08

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Definitions:

Polypeptides

Chains of amino acids linked by peptide bonds, forming the basic structure of proteins.

Triglyceride

A triglyceride is a type of fat (lipid) found in the blood, originating from the diet and stored in fat cells, used by the body for energy.

Fatty Acid

Long hydrocarbon chains that are a major component of fats and are used in cells as a source of energy.

Enzymatic Activity

The process and rate at which enzymes catalyze reactions, converting substrates into different molecules.