Makeover Inc

question 5

Multiple Choice

Makeover Inc.believes that at its current share price of R16.00 the firm is undervalued in the market.Makeover plans to repurchase 2.4 million of its 20 million shares outstanding.The firm's managers expect that they can repurchase the entire 2.4 million shares at the expected equilibrium price after repurchase.The firm's current earnings are R44 million.If management's assumptions hold, what is the expected market price after repurchase?

• A) R16.00
• B) R17.26
• C) R18.18
• D) R20.00
• E) R24.40

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Definitions:

Richest Fifth

The top 20 percent of a population sorted by wealth or income, often used to analyze economic inequality.

Poorest Fifth

A term used to describe the bottom 20% of a population or group in terms of income or economic status.

Environmental Issues

Problems related to the natural environment, including pollution, climate change, deforestation, and loss of biodiversity.

Higher Taxes

Increased governmental charges on individuals' income, property, or goods, used to fund public services and governmental operations.