A Firm Has a Market Value Equal to Its Book

question 31

Multiple Choice

A firm has a market value equal to its book value.Currently,the firm has excess cash of £600 and other assets of £5,400.Equity is worth £6,000.The firm has 500 shares outstanding and net income of £900.What will the new earnings per share be if the firm uses its excess cash to complete a share repurchase?

• A)£1.20
• B)£1.50
• C)£1.80
• D)£2.00
• E)£2.40

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Definitions:

Happiness

A state of well-being and contentment, characterized by emotions ranging from contentment to intense joy.

Job

A specific role or position that entails a set of tasks and duties performed by an individual in exchange for compensation, such as salary or wages.

Personal Lives

Pertains to the activities, relationships, and experiences that are part of an individual's private life outside of their professional obligations.

Positive Reinforcement

A technique in behavior science which motivates a desired behavior by rewarding it.