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

Question

The balance sheet for Levy Corp. is shown here in market value terms. There are 7,000 shares of stock outstanding. Instead of a dividend of $1.80 per share, the company has announced a share repurchase of $12,600 worth of stock. How many shares will be outstanding after the repurchase? (Do not round intermediate calculations and round your 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))

Explanation / Answer

Total Equity =$394100

No of shares =7000 Market Price =394100/7000=$56.30

repurchase of shares with an amount of $ 12,600

no of shares that can be bought with $ 12,600 @ present Market Price= 12600/56.30= 223.80

Share Price after repurchase

no of shares remaining after repurchase= 7000-223.80=6776.20

Equity =$ 394100

No of shares o/s 6776.20 so new price = 394100/6776.20= $ 58.16

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