Use the Following Information to Answer the Question(s)below

question 93

Multiple Choice

Use the following information to answer the question(s) below.
Wyatt Oil has assets with a market value of $600 million,$70 million of which are cash.It has debt of $250 million,and 20 million shares outstanding.Assume perfect capital markets.
-If Wyatt Oil distributes the $70 million as a share repurchase,then the number of shares outstanding after the repurchase will be closest to:

• A)16.0 million.
• B)16.5 million.
• C)17.5 million.
• D)18.0 million.

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Definitions:

Pure Monopoly

A market structure in which a single seller controls the entire supply of a product or service, and therefore can manipulate prices and conditions of sale.

Close Substitutes

Products or services that are so similar that a consumer can easily replace one with another, often affecting consumer choice and market competition.

Sole Producer

A market situation where only one supplier exists for a particular good or service, often leading to monopolistic behaviour.

Average Revenue

The amount of money received by a firm per unit of output sold.