A fiRm Has a Market Value Equal to Its Book

question 312

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:

Outcomes

The results or effects of an action, situation, or event.

Salivary Glands

Glands located in and around the mouth and throat that produce saliva, which begins the process of digestion and helps maintain oral health.

Taste Buds

Sensory organs located on the tongue that enable the perception of taste, including sweetness, sourness, bitterness, saltiness, and umami.

Health Consequences

The outcomes or effects, positive or negative, that result from specific health behaviors or conditions.