A Firm Has a Market Value Equal to Its Book

question 19

Multiple Choice

A firm has a market value equal to its book value. Currently,the firm has excess cash of $800 and other assets of $5,200. Equity is worth $6,000. The firm has 600 shares of stock outstanding and net income of $700. The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?

• A) 480 shares
• B) 500 shares
• C) 520 shares
• D) 540 shares
• E) 560 shares

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Definitions:

Unconscious Motives

Refers to hidden psychological forces that influence a person's thoughts, behaviors, and feelings, often without their awareness.

Cognitive Processes

Mental activities involved in the acquisition, processing, storage, and retrieval of information, including perception, memory, and problem-solving.

Behavioral Approaches

A theory in psychology focusing on observable behaviors and the ways in which the environment determines behavior.

Dehumanizing

The process of depriving a person or group of positive human qualities, often leading to the perception of those individuals as less than human.