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.Before the repurchase,the company's shares traded for $13.15.Over the last quarter,Prestige repurchased 804.22 million shares (7% of shares outstanding)at an average price of $15.066 per share.Shares outstanding are now 10,684.64M.Calculate the stock price after the repurchase.If you bought 100 shares prior to the repurchase and sold those shares afterwards,then what is your profit (loss)on the investment?

Question

Quizplus · Accepted Answer

The stock price after the repurchase is: P_A = P_B 11ea7fdb_fc52_c6fe_a768_4b7aa8328809_TB2902_11 - P_R 11ea7fdb_fc52_c6ff_a768_6f8e144acdc4_TB2902_11 P_B = $13.15 P_A = $13.15 × 11ea7fdb_fc52_c700_a768_719117aae57e_TB2902_11 - $15.066 × 11ea7fdb_fc52_c701_a768_d7d3ec100c15_TB2902_11 P_A = $13.01 Profit (Loss) = Sale Proceeds - Cost of Investment Profit (Loss) = 100 × P_A - 100 × P_B Profit (Loss) = 100 × (P_A - P_B) Profit (Loss) = 100 × (13.01 - 13.15) Profit (Loss) = -$14.0

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