A firm that is 100% stock financed with asset of $1 million is considering a stock repurchase of 10% of its shares. The firm has 20,000 shares outstanding and the net income is $120,000. Assume that the book value and market values are identical. The impact of the repurchase on stock price will be ??? answer: EPS after repurchase is 120,000/(20,000-2,000)=6.67 Assume the repurchase doesn't have impact on earing or P/E ratio So, Price after repurchse=6.67*P/E=55.6 I don't under the assumption here. Why P/E ration and earing don't change?????? WHY? WHY? WHY? WHY? [em06][em06][em06] | 
发表于 2007-8-24 00:53
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