A firm has 10 million shares outstanding, with a $20 per share market price. The firm has $25 million in extra cash that it plans to use in a stock repurchase; the firm has no other financial investments.
What is the firm's value of operations, and how many shares will remain after the repurchase?© BrainMass Inc. brainmass.com October 9, 2019, 11:05 pm ad1c9bdddf
The current value of the firm is 10 million shares X $20 per share = $200 million.
After the repurchase, firm ...
The solution explains how to calculate the number of shares to repurchase and the value of operations after repurchase.