In the previous problem, suppose Levy has announced it is going to repurchase $22,800 worth of stock. What effect will this transaction have on the equity of the firm? How many shares will be outstanding? What will the price per share be after the repurchase? Ignoring tax effects, show how the share repurchases is effectively the same as a cash dividend.
Answer to relevant QuestionsThe market value balance sheet for Outbox Manufacturing is shown here. Outbox has declared a stock dividend of 25 percent. The stock goes ex-dividend tomorrow (the chronology for a stock dividend is similar to that for a ...Gibson Co. has a current period cash flow of $1.1 million and pays no dividends. The present value of the company’s future cash flows is $15 million. The company is entirely financed with equity and has 600,000 shares ...Explain why shelf registration has been used by many firms instead of syndication. A company’s stock currently sells for $68 per share. Last week the firm issued rights to raise new equity. To purchase a new share, a stockholder must remit $11 and three rights. a. What is the ex-rights stock price? b. ...Discuss the accounting criteria for determining whether a lease must be reported on the balance sheet. In each case give a rationale for the criterion.
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