A Firm Has a Market Value Equal to Its Book

question 38

Multiple Choice

A firm has a market value equal to its book value,excess cash of $400,other assets of $9,200,and equity of $9,800.The firm has 500 shares of stock outstanding and net income of $420.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)440 shares
• B)445 shares
• C)480 shares
• D)910 shares
• E)915 shares

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Definitions:

Autos

Short for automobiles, referring to motor vehicles designed for passenger transportation.

Capital-Intensive

A capital-intensive process or business requires a high initial investment in machinery, equipment, or infrastructure relative to labor to produce goods or services.

Sunflower Seeds

Edible seeds from the sunflower plant, often eaten as a snack, used in recipes, or processed for their oil.

Chemicals

Chemicals are substances formed from chemical reactions between elements or compounds, and they have specific chemical compositions and properties.