Some investors think that Prestige Entertainment's repurchase program was a bad deal for shareholders,because the company paid too much for its repurchased shares.Over the last quarter,Prestige repurchased 717.16 million shares at an average price of $17.35 per share.Shares outstanding are now 11,235.51M and the stock price is $12.01,which analysts regard as its fair value.What price was Prestige trading for before the repurchase?

Question

Quizplus · Accepted Answer

P_A = P_B 11ea7fdb_fc52_9fea_a768_0370765c25eb_TB2902_11 - P_R 11ea7fdb_fc52_9feb_a768_ab91546bbc6d_TB2902_11 f = 11ea7fdb_fc52_9fec_a768_8d7d86839b5c_TB2902_11 f = 11ea7fdb_fc52_9fed_a768_a34e97dd374e_TB2902_11 = 0.06 P_B = P_A × (1 - f) + P_R × f P_B = 12.01 × (1 - 0.06) + 17.350 × 0.06 P_B = $12.33

Some Investors Think That Prestige Entertainment's Repurchase Program Was a Bad