The balance sheet for Throwing Copper, Inc., is shown here in market value terms
ID: 2799353 • Letter: T
Question
The balance sheet for Throwing Copper, Inc., is shown here in market value terms. There are 29,000 shares of stock outstanding.
The compay has announced it is going to repurchase $49,300 worth of stock instead of paying a dividend of $1.70.
What effect will this transaction have on the equity of the firm? (Input the answer as positive value. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
Will (Click to select)increasereduce shareholders’ equity by $
How many shares will be outstanding after the repurchase? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)
New shares outstanding
What will the price per share be after the repurchase? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Share price $
Explanation / Answer
Answer 1 The Equity of the Firm will decrease by 49300 since cash will be used to fund the transaction.Price of per share will be 716010/29000=24.69 and number of share reourchase will be 1997 that is 49300/24.69=1997 Answer 2 This will decrease shareholder equity Answer 3 share outstanding=total share-share repurchase share outstanding=29000-1997 share outstanding= 27003 Answer 4 share price after repurchase=(716010-49300)/27003 share price after repurchase= 24.69
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