A Firm Has a Market Value Equal to Its Book

question 16

Multiple Choice

A firm has a market value equal to its book value,excess cash of $1,000,and equity worth $17,800.The firm has 5,000 shares of stock outstanding and net income of $31,200.What will be the new earnings per share if the firm uses its excess cash to complete a stock repurchase?

• A)$7.20
• B)$6.50
• C)$6.61
• D)$5.89
• E)$6.23

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Definitions:

Unemployment Insurance Claims

Unemployment insurance claims are applications filed by individuals seeking financial assistance after losing their jobs, as part of a governmental program designed to provide temporary income support.

Employee Benefits

Non-wage compensation provided to employees in addition to their regular salaries or wages.

Increasing Cost

A situation where the price of goods or services rises over time, affecting consumer behavior and economic strategies.

Payroll Inserts

Documents or messages included with employee paychecks, commonly used to communicate organizational news, policies, or updates.