Question

How much would it cost for Chester Corporation to repurchase all its outstanding shares if new brokerage fees totaled 1% of the underlying transaction?
Select: 1

$85.3 million

$76.4 million

$83.7 million

$78.0 million

Answer 1

Answer:

$78.0 million

Explanation:

Cost of repurchase = Number of shares*Share price/(1-1%)

Cost of repurchase = $3,352,720 * $23.02/(1-1%)

Cost of repurchase = $3,352,720 * $23.02/(1 - 0.01)

Cost of repurchase = $3,352,720 * $23.02/0.99

Cost of repurchase = $3,352,720 * $23.25

Cost of repurchase = $ 77,950,740

Cost of repurchase = $78.0 million