Analyzing the Repurchase of Stock
The business section of The NewYorkTimesrecently contained the following article :
Freeport-McMoRan Copper&Gold Inc., one of the world’s largest cop per producers, said yesterday that it would repurchase up to five million shares of its common stock in the open mark et and through private transactions. The company, based in Phoenix, said it recently completed a program announced last September to buy back 2.5 million shares. Freeport-McMoRan said the purchases were being made to enhance shareholders’ value. The company has about 70.7 million shares outstanding. Shares of Freeport-McMoRan fell to $53.50 on the New York Stock Exchange yesterday.
Required:
1. Determine the impact of the stock repurchase on the financial statements.
2. Why do you thin k the board decided to repurchase the stock?
3. What impact will this purchase have on the company’s future dividend obligations?
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