Kaiser Shipyards Inc. is San Francisco-based ship builder which specializes in Liberty and Victory class cargo ships. The CEO, Henry Kaiser, wants to distribute $1B of cash using an open market stock repurchase. Assume that the company repurchases 11.650% of shares outstanding at a price of $62.725. What is the stock price after the repurchase? Kaiser Shipyards Inc.
Selected Financial Information
$$\begin{array} { | l | c | }
\hline \text { Stock Price } & \$ 62.725 \
\hline \text { Cash } & \$ 1,000 \mathrm { M } \
\hline \text { Market Capitalization } & \$ 9,408.75 \mathrm { M } \
\hline \text { Shares Outstanding } & 150 \mathrm { M } \
\hline \text { Debt } & \$ 0 \
\hline
\end{array}$$

Question

Kaiser Shipyards Inc. is San Francisco-based ship builder which specializes in Liberty and Victory class cargo ships. The CEO, Henry Kaiser, wants to distribute $1B of cash using an open market stock repurchase. Assume that the company repurchases 11.650% of shares outstanding at a price of $62.725. What is the stock price after the repurchase? Kaiser Shipyards Inc.
Selected Financial Information
$$\begin{array} { | l | c | } 
\hline \text { Stock Price } & \$ 62.725 \
\hline \text { Cash } & \$ 1,000 \mathrm { M } \
\hline \text { Market Capitalization } & \$ 9,408.75 \mathrm { M } \
\hline \text { Shares Outstanding } & 150 \mathrm { M } \
\hline \text { Debt } & \$ 0 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The stock price after the repurchase remains the same at $62.725 because the repurchase is done at the current market price, and there is no change in the company's valuation or market perception.

Kaiser Shipyards Inc A)$62725 B)$63

Kaiser Shipyards Inc A)$62725
B)$63