Allison's Has a Market Value Equal to Its Book Value

question 2

Multiple Choice

Allison's has a market value equal to its book value.Currently,the firm has excess cash of $1,100 and other assets of $12,400.Equity is worth $13,500.The firm has 2,500 shares of stock outstanding and net income of $10,800.What will be the new earnings per share if the firm uses its excess cash to complete a stock repurchase?

• A)$4.32
• B)$4.50
• C)$4.82
• D)$4.70
• E)$4.40

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Definitions:

Low Self-efficacy

The belief in one's inability to execute behaviors necessary to produce specific performance attainments.

Self-serving Bias

The common habit of a person taking credit for positive events or outcomes but blaming outside factors for negative events.

Defensive Self-esteem

A form of self-esteem characterized by fragility and sensitivity to perceived threats, often leading individuals to react defensively to criticism or challenges.

Spotlight Effect

The tendency to overestimate the extent to which our actions and appearance are noticed by others.