Use the Information for the Question(s)below

question 61

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.After the release of the new information regarding the true value of Rockwood,and following the repurchase,the firm's share price is closest to:

• A)$30.00.
• B)$30.60.
• C)$28.75.
• D)$31.50.

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Definitions:

Depression

A mood disorder characterized by persistent feelings of sadness, loss, or anger that interfere with everyday activities.

Incurable

Refers to a disease or condition that cannot be cured or adequately treated.

Mentally Healthy

A state of wellbeing in which an individual realizes their own abilities, can cope with the normal stresses of life, work productively, and contribute to their community.

Social Causation

The theory that societal factors such as poverty, inequality, and social disorganization contribute to the development of mental health issues and other social problems.