“Many companies use stock repurchases to increase earnings per share. For example, sup^ pose that a company is in the following position:
Net profit | $10 million |
Number of shares before repurchase | 1 million |
Earnings per share | $10 |
Price-earnings ratio | 20 |
Share price | $200 |
The company now repurchases 200,000 shares at $200 a share. The number of shares declines to 800,000 shares and earnings per share increase to $12.50. Assuming the price- earnings ratio stays at 20, the share price must rise to $250.” Discuss.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.