Repurchase of stock - Effect on Stock Price
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Microsoft has $35 billion in cash/money market securities earning 4% per year. Suppose the company announces that it will use $25 billion of that cash to repurchase stock. What effect will this have on the stock price? Assume the stock is selling for $52 per share. There are 4 billion shares outstanding and the expected return of the investors is 12%.
Please show work using Excel.
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Solution Summary
Calculates the share price after the announcement of repurchase of stock.
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Microsoft has $35 billion in cash/money market securities earning 4% per year. Suppose the company announces that it will use $25 billion of that cash to repurchase stock. What effect will this have on the stock price? Assume the stock is selling for $52 per share. There are 4 billion shares outstanding and the expected return of the investors is 12%.
Cash/money market ...
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