Bear Down Inc. has the following data: Value of operations: $19,000 Short-term investments; $1,000 Debt: $5,000 Number of Shares: 300 Bear Down will be distributing $1,000 by repurchasing stock. What will the intrinsic per share stock price be immediately after the repurchase?

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Bear Down Inc

Finance Dec 07, 2020

Bear Down Inc. has the following data:

Value of operations: $19,000
Short-term investments; $1,000
Debt: $5,000
Number of Shares: 300

Bear Down will be distributing $1,000 by repurchasing stock. What will the intrinsic per share stock price be immediately after the repurchase?

Expert Solution

Computation of intrinsic Stock Price per Share after the repurchase:

Intrinsic Value of Equity = Value of Operations + Short-term Investment - Debt

= $19,000+$1,000-$5,000

= $15,000

Intrinsic Stock Price per Share after the repurchase = $15,000/300 = $50

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