Question

ECB Co. has 1.25 million shares outstanding selling at $25 per share. It plans to repurchase 97,000 shares at the market price. What will be its market capitalization after the repurchase? What will be its stock price? The market capitalization after the repurchase is million. (Round to three decimal places.)

Answer 1

Market cap = 28.825 million

Stock price = $25

Step-by-step explanation:

Current outstanding shares = 1,250,000

Current price per share = $25

So, ECB current market cap = 1,250,000 × $25 = $31,250,000

Repurchase shares = 97,000

So repurchase value = 97,000 × $25 = $2,425,000

Hence, Market capitalization after repurchase = current market cap - repurchase value

= $31,250,000 - $2,425,000 = 28,825,000 or 28.825 million

Stock price = $25