Blasco's has a market value equal to its book value.Currently,the firm has excess cash of $1,332,other assets of $11,674,and equity of $7,200.The firm has 1,200 shares of stock outstanding and net income of $838.Blasco's has decided to spend one-third of its excess cash on a share repurchase program.How many shares of stock will be outstanding after the stock repurchase is completed?
A)937 shares
B)1,050 shares
C)1,126 shares
D)1,578 shares
E)1,584 shares

Question

Quizplus · Accepted Answer

Price per share = $7,200/1,200 = $6Number of shares repurchased = [(1/3) × $1,332]/$6 = 74New number of shares outstanding = 1,200 - 74 = 1,126 shares

Blasco's Has a Market Value Equal to Its Book Value