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:

Frequencies

The frequency with which an event happens or is replicated within a specific time frame or sample.

Sensory Adaptation

The process by which sensory receptors become less sensitive to constant stimuli, allowing individuals to focus on changes in their environment.

Perceptual Redundancy

The presence of more sensory information than is necessary for the recognition or understanding of an object or concept.

Weber's Law

A principle in psychology that states the smallest change in a stimulus that can be detected is a constant proportion of the original stimulus's intensity.