Question: Need some help understanding Distributions to Shareholders: Dividends and Repurchases. The specific question I am on is: A firm has 10 million shares outstanding with

Need some help understanding Distributions to Shareholders: Dividends and Repurchases. The specific question I am on is:

A firm has 10 million shares outstanding with a market price of $20 per share. The firm has $25 million in extra cash (short-term investments) that it plans to use in a stock repurchase; the firm has no other financial investments or any debt. What is the firm's value of operations, and how many shares will remain after the repurchase?

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Chapter 11: Cash Flow Estimation and Risk Analysis

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