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

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Definitions:

Accounts Payable

Money owed by a company to its creditors for goods or services that have been delivered or used, but not yet paid for.

Inventory

The total amount of goods and materials held by a company that are ready for sale or in the process of being produced.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share of the profits.

Cash Dividends

Cash distributions from a company's earnings to its shareholders as a reward.