Question

Question 3

ABC Corp. currently has $32 million in excess cash that it plans on returning to its shareholders through a dividend payment. ABC's current share price is $18 and it has 28.5 million shares outstanding. In addition, the market value of the company's debt is $14 million. Assuming perfect markets, what will the share price of ABC be after it pays the dividend? Round your answer to two decimals (do not include the $-symbol in your answer)

Question 4

XYZ Corp. currently has $10 million in excess cash that it plans on returning to its shareholders through a share repurchase. XYZ's current share price is $22.2 and it currently has 33.8 million shares outstanding. In addition, the market value of the company's debt is $19 million. Assuming perfect markets, how many shares will XYZ be able to repurchase with the excess cash? Express your answer in millions and round your answer to two decimals.

Answer 1

3)	Excess Cash = $ 32 million
	Current Share Price = $18
	No. of Shares outstanding = 28.5 Million
	Dividend per Share = $32 Million / 28.5 Million = $1.1228 per Share
	Assuming Perfect Market,
	Share Price after payment of Dividend = $ 18 - $ 1.1228
	Share Price after payment of Dividend = 16.88
4)	Excess Cash = $ 10 million
	Current Share Price = $22.2
	No. of Shares outstanding = 33.8 Million
	Assuming Perfect Market,
	No. of Shares that can be repurchased using excess cash = $ 10 Million/ $ 22.2 per Share
	No. of Shares that can be repurchased using excess cash = 450,450 (or) 0.45045 Million Shares