Author Question: Initek Co.'s stock trades for $12.50. Initek has too much cash. The CEO, Bill Lumberg, wants to ... (Read 19 times)

vinney12 · **on:** Apr 25, 2021

Initek Co.'s stock trades for $12.50. Initek has too much cash. The CEO, Bill Lumberg, wants to distribute the excess cash with an open market stock repurchase. He is contemplating buying back $5.45M worth of shares at a price of $12.50. Initek is an all equity company with 20M shares outstanding. Pete Gibb owns 2 million shares in Initek. He purchased his shares before the repurchase for $12.50. If Pete sells the same proportion of shares as the company repurchases (and receives the same price that they pay), then what is his change in wealth from before to after the repurchase?
◦ -$2.500 million
◦ -$1.250 million
◦ $0
◦ $2.500 million
◦ $12.50 million

Sassygurl126 · **Reply #1 on:** Apr 25, 2021

A FREE account is required to view all solutions!

Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

Answer Preview

Only 56% of students answer this correctly