Business, 21.05.2021 17:00 volocibel

AMC Corporation currently has an enterprise value (EV) of $400 million and $100 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMC uses its excess cash to repurchase shares. After the share repurchase, news will come out that will change AMC's enterprise value to either $600 million or $200 million. Required:
a. What is AMC’s share price prior to the share repurchase?
b. What is AMC’s share price after the repurchase if its enterprise value goes up? What is AMC’s share price after the repurchase if its enterprise value declines?
c. Suppose AMC waits until after the news comes out to do the share repurchase. What is AMC’s share price after the repurchase if its enterprise value goes up? What is AMC’s share price after the repurchase if its enterprise value declines?
d. Suppose AMC management expects good news to come out. Based on your answers to parts b and c, if management desires to maximize AMC’s ultimate share price, will they undertake the repurchase before or after the news comes out? When would management undertake the repurchase if they expect bad news to come out?
e. Given your answer to part d, what effect would you expect an announcement of a share repurchase to have on the stock price? Why?

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 11:30

Mark knopf is an auditor who has been asked to provide an audit and financial statement certification for a company that is going public on the new york stock exchange. knopf wants to know his personal liability if the company provides him with inaccurate or false information. which of the following sources of law will him answer that question? a. the city ordinances where the company headquarters is located. b. the state constitution of the state where the company is incorporated. c. code of federal regulations. d. all of the above

Answers: 1

Answer

Business, 22.06.2019 18:30

Hilary works at klothes kloset. she quickly the customers, and her cash drawer is always correct at the end of her shift. however, she never tries to "upsell" the customers (for example, by asking if they would like to purchase earrings to go with the shirt they chose or by suggesting a purse that matches the shoes they are buying). give hilary some constructive feedback on her performance.

Answers: 3

Answer

Business, 22.06.2019 19:00

By 2020, automobile market analysts expect that the demand for electric autos will increase as buyers become more familiar with the technology. however, the costs of producing electric autos may increase because of higher costs for inputs (e.g., rare earth elements), or they may decrease as the manufacturers learn better assembly methods (i.e., learning by doing). what is the expected impact of these changes on the equilibrium price and quantity for electric autos?

Answers: 1

Answer

Business, 22.06.2019 22:40

Utilization will always be lower than efficiency because: a. effective capacity is greater than design capacityb. expected output is less than actual output.c. effective capacity equals design capacity.d. effective capacity is less than design capacity.e. expected output is less than rated capacity.

Answers: 3

Answer

You know the right answer?

AMC Corporation currently has an enterprise value (EV) of $400 million and $100 million in excess ca...

Questions

Business, 25.03.2020 20:38

Evan, a manager at a department store, believes most of his subordinates dislike work and would avoid it if possible. He also believes that his employ...