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

question 91

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 its stock price after the share repurchase will be closest to:

• A)$11.00.
• B)$12.50.
• C)$14.00.
• D)$17.50.

---

Definitions:

Total Variable Costs

The summation of all costs that vary with the level of output, such as raw materials and labor costs, differing from fixed costs.

Total Fixed Costs

The sum of all costs required to produce any good or service, that do not change with the volume of production.

Average Variable Costs

The total variable expenses of producing an item, divided by the quantity of items produced, accounting for costs that change with the production volume.

AVC Curve

The Average Variable Cost curve, in economics, represents how the variable cost per unit changes with the level of output.