Final answer:
AMC Corporation's share price after a share repurchase will depend on the future enterprise value. If EV increases to $530 million, the share price will rise post-repurchase. If EV declines to $130 million, the share price will decrease post-repurchase.
Step-by-step explanation:
The AMC Corporation's scenario involves a strategic share repurchase plan using excess cash reserves. To determine the post-repurchase share price, we need to examine two potential outcomes based on the estimated future enterprise value (EV).
If AMC's enterprise value increases to $530 million, after using $130 million of excess cash to repurchase shares, the new share count would be the original 25 million shares less the number repurchased with the excess cash ($130 million divided by the share price prior to the repurchase). With the increased EV, the share price is likely to rise as the market capitalizes on the company's growth prospects. Conversely, if AMC's enterprise value declines to $130 million, the remaining shares would reflect a lower value due to diminished future prospects, resulting in a lower share price after repurchase.
Thus, AMC's share price post-repurchase will vary significantly depending on these outcomes. It is also essential to note that real-world share repurchases could be influenced by market dynamics, investor sentiment, and regulatory considerations that might cause deviations from the theoretical outcomes described.