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22 August, 12:31

The Press has total assets of $848,000 and total debt of $402,000 on a market value basis. There are 25,000 shares of stock outstanding. The company has announced it is going to repurchase $40,000 worth of stock in the open market. What will be the price per share after the repurchase

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  1. 22 August, 12:53
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    Answer: $17.84

    Explanation:

    The following can be reduced. fromcthe question:

    Total Assets = $848,000

    Total Debt = $402,000

    Total equity = Total asset - total debt

    = $848,000 - 402,000

    = $446,000

    Outstanding Shares = 25,000

    Value per shares:

    = $446,000/25,000

    = $17.84

    Value of shares repurchased = $40,000

    Number of shares repurchased:

    = $40,000/17.84

    = 2,242.15

    = 2242 approximately

    Number of shares outstanding:

    = 25,000 - 2,242

    = 22,758

    Value of shares outstanding:

    = $446,000 - 40,000

    = $406,000

    Price of Shares = Value of shares/number of shares

    = $406,000 / 22,758

    = $17.84
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