Post on 05-Oct-2015
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Sheet1If Julies shares are repurchased, the firms assets (represented by cash) and, therefore, value declines by:187,500 shares x 32 per share6,000,000The firms new market value is determined as follows:Market Value before Repurchase (2,062,500 shares x 32 per share)66,000,000Reduction in value occasioned by Repurchase6,000,000New Market Value60,000,000
Number of shares outstanding after repurchase = 2,062,500 187,500 = 2,062,500 187,500 = 1,875,0001,875,000