In the previous problem, suppose Knox has announced it is going to repurchase $12,600 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 previous problem

The statement of financial position for Knox Corp. is shown here in market value terms. There are 9,000 shares of stock outstanding.

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Market Value Statement of Financial Position $ 43,700 Cash $353,700 Equity Fixed assets Total 310,000 Total $353,700 $353,700