The equity of Enterprise Holds Inc. has a market value of $3 million. It currently has 300,000 shares outstanding, and a book value of equity of $1,095,000. An unexpected cash windfall has prompted management to consider either a special dividend of $6.00 per share or a stock repurchase for cash.
If management estimates that a stock repurchase announcement will increase stock price by 5 percent, how many shares should they be prepared to repurchase?
Total Market Capitalization = $3,000,000
Total Shares Outstanding = 300,000
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Stock price valuation and IRR question for Buffet's Berkshire purchase of GEICO
I would like to receive a draft response to the following question which relates to the attached case study. Please show formula and calculation in response.
'Note the Value Line forecast of dividends (on P20). Value Line's forecasts of a share price of $90 at the low end of the range and $125 at the high end of the range at YR2000. What would Buffet expect the stock price to be at YR2000 to achieve his 28% average annual gain (or IRR) on the GEICO investment in 1995?'View Full Posting Details