A firm has $300 million of assets that includes $50 million of cash and 10 million shares outstanding. If the firm uses $30 million of its cash to repurchase shares, what is the new price per share?

Question

Quizplus · Accepted Answer

After the repurchase, the firm will have $270 million in assets ($300 million - $30 million) and 9 million shares outstanding (10 million - 1 million repurchased). The new price per share is $270 million / 9 million shares = $30.

A Firm Has $300 Million of Assets That Includes $50