Use the Information for the Question(s)below

question 37

Multiple Choice

Use the information for the question(s) below.
Rockwood Industries has 100 million shares outstanding,a current share price of $25,and no debt.Rockwood's management believes that the shares are underpriced,and that the true value is $30 per share.Rockwood plans to pay $250 million in cash to its shareholders by repurchasing shares.Management expects that very soon new information will come out that will cause investors to revise their opinion of the firm and agree with Rockwood's assessment of the firm's true value.
-Assume that Rockwood is not able to repurchase shares prior to the market becoming aware of the new information regarding Rockwood's true value.If Rockwood repurchases the shares following the release of the new information,then the number of shares outstanding following the repurchase is closest to:

• A)92 million.
• B)90 million.
• C)75 million.
• D)10 million.

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Definitions:

Five Stages

A reference to a framework or model dividing a process or phenomenon into five distinct phases.

Employment Interview

A formal meeting between a job applicant and a representative of the company, aimed at evaluating the applicant's suitability for the position.

Appropriateness

The quality of being suitable or fitting for a particular purpose, person, occasion, or place.

Selection Process

The series of steps employers use to decide which candidates to hire from a pool of applicants.