The balance sheet for Pie Crust, Inc., is given below in market value terms. There are 29,000 shares of stock outstanding.
Market Value Balance Sheet
Cash $156,000
Fixed assets 560,010 Equity $716,010
Total $716,010 Total $716,010
In lieu of the dividend of $1.70, company has said it is going to repurchase $49,300 value of stock instead of paying dividend.
Requirement 1: Find effect will transaction have on equity of firm?
Will shareholders (decrease or Increase?) equity by $________?
Requirement 2: Find number of shares will be outstanding after repurchase?
Requirement 3: Compute price per share be after repurchase?
Requirement 4: Is share repurchase effectively same as the cash dividend?