The balance sheet for Apple Pie Corp. is shown here in market value terms. There are 5,000 shares of stock outstanding. The company has announced that it is going to repurchase $4,350 worth of stock. What will the price of the stock be after this repurchase?

Question

The balance sheet for Apple Pie Corp. is shown here in market value terms. There are 5,000 shares of stock outstanding.  The company has announced that it is going to repurchase $4,350 worth of stock. What will the price of the stock be after this repurchase?

Quizplus · Accepted Answer

Current price per share = $175,000/5,000 = $35Number of shares repurchased = $4,350/$35 = 124.29New shares outstanding = 5,000 - 124.29 = 4,875.71New share price = ($175,000 - $4,350)/4,875.71 = $35

The Balance Sheet for Apple Pie Corp