A Firm Has Current Assets of $1

question 93

Multiple Choice

A firm has current assets of $1.2 million,fixed assets of $3.6 million,and debt of $2.2 million.There are 250,000 shares of stock outstanding.What will be the book value of equity if the firm repurchases 10% of its outstanding shares for $10.40 a share?

• A) $2,552,000
• B) $2,600,000
• C) $2,340,000
• D) $2,574,000

---

Definitions:

Price-Elastic

describes a market condition where the demand for a product changes significantly in response to a change in its price.

Consumer Spending

The total expenditures by households on goods and services, which is a primary component of aggregate demand in an economy.

Increase

A rise in quantity or quality in a given context, such as price, value, or productivity.

Price Elasticity

An index reflecting the degree to which the demand for a product varies with a shift in its cost.