Question 23

Presented below is a comparative balance sheet for Scanning Corporation for the years ending December 31, 2015 and 2014. The amounts are in millions of dollars.

	2015	2014			2015	2014
Operating cash	60	50		Accounts payable	1,200	1,040
Short-term investments (at market)	550	500		Accrued liabilities	390	450
Accounts receivable	940	790		Long-term debt	1,840	1,970
Inventory	910	840
Property and plant	2,840	2,710		Common equity	1,870	1,430
	5,300	4,890			5,300	4,890

The following is the statement of common shareholders equity for 2015 (in millions of dollars):

Balance, end of fiscal year 2014	1,430
Share issues from exercised employee stock options	810
Repurchase of 24 million shares	(720)
Cash dividend	(180)
Tax benefit from exercise of employee stock options	12
Unrealized gain on investments	50
Net income	468
Balance, end of fiscal year 2015	1,870

The firms income tax rate is 35%. The firm reported $15 million in interest income and $98 million in interest expense for 2015. Sales revenue was $3,726 million.

The shares repurchased were in settlement of a forward purchase agreement. The market price of the shares at the time of the repurchase was $25 each. What was the effect of this transaction on the income for the shareholders?