The market value of Scorpion Corporation equals its book value. Currently, the firm has excess cash...

 

Transcribed Image Text:

The market value of Scorpion Corporation equals its book value. Currently, the firm has excess cash of $1,100 and other assets of $12,400. Equity is worth $13,500. The firm has 2,500 shares of stock outstanding and a net income of $10,800. What will be the new earnings per share if the firm uses its excess cash to complete a stock repurchase? Tom Fong Music Inc., has an outstanding bond callable at $1,340. The total value of the bond is $100 million. The company is considering issuing a new bond and using the proceeds to buy back the existing bond. The transaction cost of such refunding is $23,430,000. Suppose the tax rate is 30%. The total after-tax cost of refunding is approximately Al Logistics has 15,000 shares of stock outstanding with a market value per share of $8. The firm just announced a stock dividend of 10 percent. What will be the market price per share after the dividend? The market value of Scorpion Corporation equals its book value. Currently, the firm has excess cash of $1,100 and other assets of $12,400. Equity is worth $13,500. The firm has 2,500 shares of stock outstanding and a net income of $10,800. What will be the new earnings per share if the firm uses its excess cash to complete a stock repurchase? Tom Fong Music Inc., has an outstanding bond callable at $1,340. The total value of the bond is $100 million. The company is considering issuing a new bond and using the proceeds to buy back the existing bond. The transaction cost of such refunding is $23,430,000. Suppose the tax rate is 30%. The total after-tax cost of refunding is approximately Al Logistics has 15,000 shares of stock outstanding with a market value per share of $8. The firm just announced a stock dividend of 10 percent. What will be the market price per share after the dividend?

Answer rating: 100% (QA)

1 To calculate the new earnings per share EPS after the stock repurchase we need to determine the number of shares repurchased using the excess cash The excess cash is given as 1100 and the market val... View the full answer