Galt Industries has 125 million shares outstanding and has a corporate tax rate of 21%.Galt announces that it will use $75 million in excess cash to repurchase shares.Shareholders had previously assumed that Galt would retain this excess cash permanently.The amount Galt's share price can be expected to change upon this announcement is closest to:

Question

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The repurchase of shares will reduce the number of shares outstanding, which will increase the EPS. The increase in EPS will lead to an increase in the share price. The amount of the increase in the share price can be calculated as follows:Increase in EPS = $75 million / (125 million shares * (1 - 21%)) = $0.13 per shareIncrease in share price = $0.13 per share * (1 + 21%) = $0.16 per share

Galt Industries Has 125 Million Shares Outstanding and Has a Corporate