In Problem 5, suppose the company has announced it is going to repurchase $18,200 worth of stock.
Question:
In Problem 5, suppose the company has announced it is going to repurchase $18,200 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 repurchase is effectively the same as a cash dividend
Data from problem 5
The balance sheet for Sinking Ship Corp. is shown here in market value terms. There are 14,000 shares of stock outstanding.
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Repurchasing the shares will reduce cash and shareholders equity b...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-1260153590
12th edition
Authors: Stephen M. Ross, Randolph W Westerfield, Robert R. Dockson, Bradford D Jordan
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