Cisco Systems has at this moment 10 million shares outstanding and the following market-value balance sheet: Balance
Question:
Cisco Systems has at this moment 10 million shares outstanding and the following market-value balance sheet:
Balance Sheet (Market Values, $ Million) Surplus cash50.0
Debt0
Net Working Capital & Assets500.0
Equity550.0
$550.0
$550.0
Assuming that neither the firm nor its investors pay taxes, answer the following questions:
I) What is Cisco's current share price?
II) If Cisco now sells a patent that it previously thought was worthless and is paid $20 million in cash, and its (market value) surplus cash rises to $70.0 million, what is Cisco's new share price?
III) If Cisco decides to pay out all its surplus cash ($70.0 million) as a cash dividend, what is Cisco's ex-dividend share price?
IV) If the firm pays out all its surplus cash ($70.0 million) through an offer to repurchase shares at the fair market value per share, what is Cisco's post-offer share price?
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts