Water Mills has a market value equal to its book value. Currently, the company has excess cash of $1,368, other assets of $35,807, and equity valued at $23,750. There are 2,500 shares of stock outstanding and net income is $470. What will the new earnings per share be if the firm uses 25 percent of its excess cash to complete a stock repurchase?
A) $.19
B) $.33
C) $.26
D) $.08
E) $.13

Question

Quizplus · Accepted Answer

The Answer of Water Mills has a market value equal to its book value. Currently, the company has excess cash of $1,368, other assets of $35,807, and equity valued at $23,750. There are 2,500 shares of stock outstanding and net income is $470. What will the new earnings per share be if the firm uses 25 percent of its excess cash to complete a stock repurchase?
A) $.19
B) $.33
C) $.26
D) $.08
E) $.13

Water Mills Has a Market Value Equal to Its Book