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Should creditors be happy with the decision to purchase

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Reference no: EM133012149

Assume that Corporation A wants to purchase 5,000 more treasury shares in early 20X4 and then sell these same 5,000 shares at year-end 20X4 when, at that time, Corporation A believes that the market price will approximate $62 per share(below its year-end 20X3 intrinsic value).

Required:

Problem 1: All else equal, is this purchase a good use of capital?

Problem 2: Should creditors be happy with the decision to purchase the treasury stock?

Reference no: EM133012149

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