A fiRm Has a Market Value Equal to Its Book

question 302

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

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