CareMore, Inc.
provides in-home medical assistance to the elderly and earned net
income of $5 million that it plans to use to repurchase shares of
the firm's common stock, which is currently selling for $ 44 a
share. CareMore has 25 million shares of stock outstanding.
a. What fraction of the firm's shares can the firm repurchase
for $5 million?
b. If the share repurchase has no impact on the firm's net
income, what will be its earnings per share after the
repurchase?
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