The balance sheet for Levy Corp. is shown here in market value terms. There are

Question

The balance sheet for Levy Corp. is shown here in market value terms. There are 6.000 shares of stock outstanding. Instead of a dividend of $1.80 per share, the company has announced a share repurchase of $10,800 worth of stock. How many shares will be outstanding after the repurchase? (Do not round intermediate calculations and round your answer to 2 decimal places, (e.g., 32.16)) What will the price per share be after the repurchase? (Do not round intermediate calculations and round your final answer to 2 decimal places, (e.g., 32.16))

Explanation / Answer

6000 shares worth $535500 are outstanding.

If shares worth $10800 are repurchased, number of shares repurchased = 6000 / 535500 * 10800 = 121 shares

Number of shares outstanding after repurchase = 6000 - 121 = 5879 shares

Price after repurchase = ($535500 - $10800) / 5879 = $89.25 approx.

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