Use the Information for the Question(s)below

question 72

Essay

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.
-Calculate Rockwood's stock price following the market becoming aware of the new information regarding Rockwood's true value,if (1)Rockwood completed the repurchase prior to the market becoming aware of the information and (2)Rockwood completed the repurchase following the market becoming aware of the new information.

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Definitions:

Hereditary Influences

Genetic factors passed down from parents to offspring that affect various characteristics and traits.

Overconfident

A cognitive bias characterized by an individual's belief that they are more capable or knowledgeable than they actually are.

Communication "Don't"

Guidelines or practices to avoid in effective communication, usually aimed at preventing misunderstandings or offense.

Common Courtesy

Polite behavior that shows respect for other people, including manners and acts of kindness observed in societal interactions.