A Firm Has a Market Value Equal to Its Book

question 108

Multiple Choice

A firm has a market value equal to its book value. Currently, the firm has excess cash of $500 and other assets of $7,500. Equity is worth $8,000. The firm has 250 shares of stock outstanding and net income of $1,120. 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) $28
• B) $30
• C) $32
• D) $34
• E) $36

---

Definitions:

Scatterplot

A graphical representation of two variable data points which helps in determining the relationship between them.

Correlation

A quantifiable measure that reflects how closely two or more variables are related in terms of their movements.

Size of The Blaze

The size of the blaze refers to the extent or area that a fire has covered or is covering, denoting the magnitude of the fire incident.

Consumer Price Index

An index measuring the change in the price level of a basket of consumer goods and services purchased by households.