The balance sheet for Chevelle Corp. is shown here in market value terms. There

Question

The balance sheet for Chevelle Corp. is shown here in market value terms. There are 10,000 shares of stock outstanding.

  

  

Instead of a dividend of $1.60 per share, the company has announced a share repurchase of $16,000 worth of stock.

  

How many shares will be outstanding after the repurchase? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

  

  

What will the price per share be after the repurchase? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

  

Market Value Balance Sheet   Cash $ 45,300   Equity $ 515,300   Fixed assets 470,000      Total $ 515,300      Total $ 515,300

Explanation / Answer

Answer:

Calculation of shares outstanding after the repurchase:

Current Market value per share = $515300 / 10000 = $51.53

Value of shares repurchased = $16000

Hence Number of shares repurchased = 16000 / 51.53 = 310.50 Shares

Hence shares outstanding after the repurchase = 10000 – 310.50 = 9689.50 Shares

Price per share be after the repurchase = $51.53

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