Question: Question 2 Google Books Incorporated has a market value equal to its book value. Currently, the firm has excess cash of $150,000 other assets of

Question 2

Google Books Incorporated has a market value equal to its book value. Currently, the firm has excess cash of $150,000 other assets of $ 345,000 and equity valued at $ 415,000. The firm has 5,000 shares of stock outstanding and net income of $85,000. What will the new earnings per share be if the firm uses 45 percent of its excess cash to complete a stock repurchase? (Show all workings) (15 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

x Blackboard XCO Question Completion Status QUESTION 1 Flotation costs: are deducted as a business expense in the year incurred. cannot be deducted as a business expense. are amortized using the...

QUESTION 2 Assume a firm has a market value equal to its book value, excess cash of $900, other assets of $16,500, and equity valued at $17,400. The firm has 1,200 shares of stock outstanding and net...

Question 3 (20 marks) Edwards Corp. is unlevered and is valued at $640,000. The company is currently deciding whether including debt in its capital structure would increase its firm value. The...

Question 6 a) Billingsley United declared a $0.20 a share dividend on Thursday, October 16. The dividend will be paid on Monday, November 10 to shareholders of record on Friday, October 31. Which one...

FINANCE 1. The rate of return on the common stock of Lancaster Woolens is expected to be 21 percent in a boom economy, 11 percent in a normal economy, and only 3 percent in a recessionary economy....

Boats and Balthas 74,000 shares outstanding that sell for a price of $70 per share. The stock has a par value of $2 per share. The company's balance sheet shows capital surplus of $165.000 and...

N.B.: Figures in the margin indicate full marks. Answer any four questions. All parts of a question must be answered in a single group. a) What is Capital rationing? In theory, should capital...

Trial Test 4: Only the figures are needed. Leave answers on rates to percentages and correct all your answers to 2 decimal places. 1. Assume that a 7% coupon bond with a 30 year maturity has a par...

Remaining Time: 1 hour, 28 minutes, 25 seconds. * Question Completion Status: Moving to the next question prevents changes to this answer. Question 7 Question 7 of 6 2 points Save Answer A firm has a...

Next Ques Saved * Question Completion Status: Moving to the next question prevents changes to this answer. Question 3 Question 3 of 60 2 points A firm has a market value equal to its book value....

Data for Rusch Company are presented in BE. Compute the cost of the ending inventory under the average-cost method, assuming there are 450 units on hand. In its first month of operations, Rusch...

The following data is given: V = 100/0.Ro = 500 N, Xmj200 N. R + R = 2 N X + X = j4 N, N = 100, N = 500 A single phase transformer has a load connected on the secondary with load impedance Zload =...

1 8 : 1 9 Time Remaining Multiple Choice 3 points The area of accounting dealing with the preparation of financial statements showing a business's results of operations, financial position and cauh...

P-1) (100 Pts.) A chemical manufacturing company (CMC) has a contract for the procurement of the neccssaly chemicals from four suppliers. The chemicals purchased from Supplier A are priced at $20...

Analyse the various techniques of training and learning.

Understand the role of human resources in creating an effective working environment.

Describe the various actions that employers can take to encourage participation and involvement, which will encourage high rates of employee engagement.