The following figures represent the equity situation of Dewey Cheatum & Howe, we

Question

The following figures represent the equity situation of Dewey Cheatum & Howe, well-known producer of Miracle Cure—a guaranteed tonic for whatever ails you!

                                    Authorized shares     12,000,000,000

                                    Shares issued               5,500,000,000

                                    Shares outstanding      4,500,000,000

                                    Float                            4,250,000,000

a. If shares of Miracle Cure are selling for $15/share, what is the firm’s market capitalization? Show your calculation.
b. How many shares must be in the treasury stock. Show your calculation.

Explanation / Answer

a. If Miracle Cure are selling for $15/share, the firm's market capitalisation is 67,500,000,000 (4,500,000,000*15) (Shares outstanding*Market price of share)

b. The treasury stock would be 1,000,000,000 (5,500,000,000-4,500,000,000)(Shares issued-Shares Outstanding)

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