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kodGreya [7K]
3 years ago
15

A firm has a market value equal to its book value. Currently, the firm has excess cash of $300 and other assets of $6,200. Equit

y is worth $5,000. The firm has 500 shares of stock outstanding and net income of $720. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?
Business
1 answer:
Jlenok [28]3 years ago
8 0

Answer:

new earnings per share is $1.53

Explanation:

Given data

excess cash = $300

Equity is worth = $5,000

other assets = $6,200

stock outstanding  = 500 shares

net income = $720

to find out

new earnings per share

solution

we know that equity per value is Equity / stock outstanding

that is

equity per value = (5000 / 500) = 10

equity per value = $10

and

we can purchase equity with excess cash $300 that is

= excess cash / equity per value

purchase equity with excess cash = (300 / 10)  = 30

purchase equity with excess cash = 30 shares

so

after repurchase we have balance share is =  (500 - 30) = 470

balance share = 470 shares

so that

new earnings per share will be = net income / balance share

new earnings per share =  (720 / 470) = 1.53

new earnings per share is $1.53

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3 years ago
a 1000 par value 18-year bond with annual coupons is bought to yield an annual effective rate of 5%. the amount for amortization
marta [7]

The book value of the bond at the end of year 10 is 1,160

What is the basis for determining premium amortization?

The bond premium amortization is assumed to be determined using the straight-line basis such that bond premium amortized in each year is the same for 18 years of bond investment, in other words, the year 10 bond premium amortization of 20 is the same for all other years.

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3 0
1 year ago
Two car manufacturers, Saab and Volvo, have fixed costs of $1 billion and marginal costs of $10,000 per car. If Saab produces 50
igomit [66]

Answer:

Explanation:

First, write down Total fixed cost for each;

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Fixed cost; Volvo = $1,000,000,000

Next find the Total Variable cost (TVC)

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ssume that interest rate parity exists. You expect that the one-year nominal interest rate in the U.S. is 7%, while the one-year
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Answer:

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