Stock repurchase announcement will increase stock price

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Reference no: EM131045234

Additional problem: The equity of a certain company has a market value for $3 million. It currently has 300,000 shares outstanding, and a book value of equity of $1,095,000. An unexpected cash windfall has prompted management to consider either a special dividend of $6.00 per share or a sock repurchase for cash. Answer the following questions based on this scenario:

If management estimates that a stock repurchase announcement will increase stock price by 5 percent, how many shares should they be prepared to repurchase?

Reference no: EM131045234

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