Jenningston Mills Has a Market Value Equal to Its Book

question 60

Multiple Choice

Jenningston Mills has a market value equal to its book value.Currently,the firm has excess cash of $1,200,other assets of $5,800,and equity valued at $3,750.The firm has 250 shares of stock outstanding and net income of $420.What will the new earnings per share be if the firm uses 25 percent of its excess cash to complete a stock repurchase?

• A)$1.83
• B)$1.89
• C)$1.96
• D)$2.00
• E)$2.08

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Definitions:

Net Creditor Nation

A country that has more investments abroad than other countries have within its borders, resulting in a positive balance of international investments.

Current Account

A component of a country's balance of payments that includes the trade balance, net primary income, and net secondary income.

European Nations

Countries located in Europe, characterized by diverse cultures, languages, and economies but often interconnected through political and economic unions.

Gold Standard

A currency regime where the national fiat currency's worth is directly pegged to gold.