Chandler Corporation has 1 million shares outstanding. The current price per share is $20. If the company decides to use $2 million dollars to repurchase shares at the market price, the company will have ________ shares outstanding worth approximately ________. Assume that the price does not change during the repurchase period.

Question

Quizplus · Accepted Answer

With $2 million and a share price of $20, the company can buy back 100,000 shares ($2,000,000 / $20 per share), leaving 900,000 shares outstanding. The price per share remains $20 since the assumption is that the price does not change during the repurchase.

Chandler Corporation Has 1 Million Shares Outstanding