Question

CareMore, Inc. provides in- home medical assistance to the elderly and earned net income of $ 5 million that it plans to use to repurchase shares of the firm’s common stock, which is currently selling for $ 50 a share. CareMore has 20 million shares of stock outstanding.
a. What fraction of the firm’s shares can the firm repurchase for $ 5 million?
b. If the share repurchase has no impact on the firm’s net income, what will be its earnings per share after the repurchase?


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  • CreatedSeptember 11, 2015
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