The balance sheet for Ferguson Corp. is shown here in market value terms. There
ID: 2760192 • Letter: T
Question
The balance sheet for Ferguson Corp. is shown here in market value terms. There are 10,000 shares of stock outstanding. Instead of a dividend of $1.90 per share, the company has announced a share repurchase of $19,000 worth of stock. How many shares will be outstanding after the repurchase? (Do not round intermediate calculations. Round your final answer to 2 decimal places, e.g., 32.16.) What will the price per share be after the repurchase? (Do not round intermediate calculations. Round your final answer to 2 decimal places, e.g., 32.16.)Explanation / Answer
Number of shares remaining after repurchase
1First calculat the current shares price
= Equity/Shares outstnading
=485000/10000
=48.5
Shares to be bought back
= 19000/48.5
=391.75
391 shares
If the equity remains same as 485000
Then the share price would be = 48500/9609 =50.47