Question

The following data apply to Elizabeth's Electrical Equipment:
Value of operations $20,000
Short-term investments $1,000
Debt $6,000
Number of shares 300
The company plans on distributing $50 million by repurchasing stock. What will the intrinsic per share stock price be immediately after the repurchase?

Answer 1

Answer:

$50

Explanation:

Calculation to determine the intrinsic per share stock price be immediately after the repurchase

First step

Total Assets=Value of operations of 20,000+ Short term investments of 1000

Total Assets=$21,000

Second step

Equity =Assets - Debt

Equity= $21,000-$6,000

Equity= $15,000

Now let determine the intrinsic per share stock price

Intrinsic per share stock price=$15,000/300

Intrinsic per share stock price=$50

Therefore the Intrinsic value per share will be $50 immediately after the repurchase has occured.