The Gallagher Company has $1 million in excess cash it wishes to return to stockholders. Selected financial information is as follows. If Gallagher chooses to distribute the cash through a stock repurchase and the price earnings ratio doesn't change through the transaction, what will the stock's market price be after the shares are acquired?

Question

The Gallagher Company has $1 million in excess cash it wishes to return to stockholders. Selected financial information is as follows.  If Gallagher chooses to distribute the cash through a stock repurchase and the price earnings ratio doesn't change through the transaction, what will the stock's market price be after the shares are acquired?

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The Answer of The Gallagher Company has $1 million in excess cash it wishes to return to stockholders. Selected financial information is as follows.  If Gallagher chooses to distribute the cash through a stock repurchase and the price earnings ratio doesn't change through the transaction, what will the stock's market price be after the shares are acquired?

The Gallagher Company Has $1 Million in Excess Cash It