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What is? amc share price prior to the share? repurchase

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AMC Corporation currently has an enterprise value of $400 million and $105 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMC uses its excess cash to repurchase shares. After the share? repurchase, news will come out that will change? AMC's enterprise value to either $600 million or $ 200 million.

a. What is? AMC's share price prior to the share? repurchase?

b. What is? AMC's share price after the repurchase if its enterprise value goes? up? What is? AMC's share price after the repurchase if its enterprise value? declines?

c. Suppose AMC waits until after the news comes out to do the share repurchase. What is? AMC's share price after the repurchase if its enterprise value goes? up? What is? AMC's share price after the repurchase if its enterprise value? declines?

d. Suppose AMC management expects good news to come out. Based on your answers to parts ?(b?) and ?(c?), if management desires to maximize? AMC's ultimate share? price, will they undertake the repurchase before or after the news comes? out? When would management undertake the repurchase if they expect bad news to come? out?

e. Given your answer to ?(d?), what effect would you expect an announcement of a share repurchase to have on the stock? price? Why?

Reference no: EM132546472

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