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What will be the stock price after the repurchase

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Reference no: EM132842673

Imagine that Telephonic Industries has excess cash of $300,000 and is considering an immediate payment of this amount as an extra dividend. The firm forecasts that, after the dividend, earnings will be $450,000 per year. There are 100,000 shares outstanding. The cost of capital of the firm is 16.67%. Imagine that the firm offers to repurchase its existing stock at $30.

How many shares will the firm be able to buy? What will be the market value of equity after the repurchase? What will be the stock price after the repurchase?

Reference no: EM132842673

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