Lester's Has a Market Value Balance Sheet as Shown Below

question 69

Multiple Choice

Lester's has a market value balance sheet as shown below. The firm currently has 7,500 shares of stock outstanding at a price per share of $40. Net income is $9,500. The firm has decided to repurchase $20,000 worth of its outstanding stock. What will the firm's PE ratio be after this repurchase, all else held constant?

• A) 23.39
• B) 28.76
• C) 29.47
• D) 30.13
• E) 32.16

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Definitions:

Political Colonialism

The practice or policy of controlling a country or area by establishing colonies there, often involving economic exploitation and cultural domination.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

National GAAP

Generally Accepted Accounting Principles specific to a country, which consist of a set of accounting standards and practices that are followed within that nation.

IFRS

International Financial Reporting Standards, a set of accounting guidelines and standards for financial reporting adopted by many countries globally.