A Firm Has a Market Value Equal to Its Book

question 213

Multiple Choice

A firm has a market value equal to its book value. Currently, the firm has excess cash of $990 and other assets of $10,010. Equity is worth $11,000. The firm has 500 shares of stock outstanding and net income of $2,250. The firm is going to use all of its excess cash to repurchase shares of stock. What will the stock price per share be after the stock repurchase is completed?

• A) $22
• B) $24
• C) $26
• D) $28
• E) $30

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Definitions:

Group Sales Presentation

A sales pitch or presentation delivered to multiple potential buyers at once, often used to generate interest in a product or service among a collective audience.

Appendix

A section at the end of a document or book that contains supplementary information which is relevant to the main text.

Insurance

A contractual arrangement where an individual or entity receives financial protection or reimbursement against losses from an insurance company.