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Triss [41]
2 years ago
7

Tucker's National Distributing has a current market value of equity of $32,400. Currently, the firm has excess cash of $2,100, t

otal assets of $22,400, net income of $3,210, and 800 shares of stock outstanding. The company is going to use all of its excess cash to repurchase shares of stock. What will the stock price per share be after the stock repurchase is completed
Business
1 answer:
garri49 [273]2 years ago
6 0

Answer:

$40.45

Explanation:

Given;

current market value of equity = $32,400

excess cash = $2,100

total assets = $22,400

net income = $3,210

Outstanding shares = 800

Price per share for the current shares

= current market value of equity / Outstanding shares

= $32,400 / 800

= $40.5

Now, the excess cash (i.e $2100) is used for purchasing shares

thus,

number of shares repurchased = excess cash  / Price per share

or

number of shares repurchased = $2,100 / ( $40.5 per share ) = 51.85

or 51 shares

Therefore, the number of outstanding shares = 800 - 51 = 749

Thus, new equity = current market value of equity - excess cash

= $32,400 - $2,100 = $30,300

Hence,

the stock price per share be after the stock repurchase is completed

= New equity / Outstanding share

= $30,300 / 749

= $40.45

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The present value of the project is $72349.51.

Since we consider only incremental cash flows for a project, we consider $21,600 for year one and calculate a 4% increase for each of the additional years.

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8 0
3 years ago
Explain whether you agree or disagree with the following statement.
butalik [34]

Answer: AGREE

Explanation:

A Monopoly faces no competition and are the only sellers of the product they sell. If firms in an industry successfully engage in collusion, the resultant effect will definitely be not unlike a Monopoly because they will set prices as a single firm, control output as a single firm and essentially run the market as a single firm.

They will sell at a rate where the Marginal Revenue curve will be below the demand curve. This will mean a higher price than a competitive market which was probably the main incentive for collusion.

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7 0
3 years ago
On August 1, Steffen Computers, Inc. purchased thirty computer chips on account from a company located in Taiwan for 520,000 Tai
Vsevolod [243]

Answer:

(C) debit to Foreign-Currency Transaction Loss-$1040

Explanation:

Foreign currency related Financial assets and financial liabilities are usually revalued with any difference as a result of the exchange rates posted as a gain or loss in the income statement.

On transaction date, cost of assets

= 520000 * $0.034

On payment date, the amount paid

= 520000 * $0.036

The amount paid is higher than the liability recorded before hence the difference is recognized as a loss on foreign exchange.

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4 0
3 years ago
Sandhill uses the conventional retail method to determine its ending inventory at cost. Assume the beginning inventory at cost (
miskamm [114]

Answer:

$567,056

Explanation:

Cost :

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= $386,000 + $1,975,000 + $125,000

= $2,486,000

Retails:

Merchandize available for sale:

= Beginning inventory + Purchases + Markups

= $590,000 + $3,220,000 + $68,000

= $3,878,000

Ending inventory at retail = Retail total -markdowns - Net sales

= $3,878,000 - $104,000 - $2,920,000

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Ending inventory at retail = $854,000

And

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Therefore,

Ending inventory at cost = $854,000 × 66.40% = $567,056

4 0
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aksik [14]
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