Cash-2-Day currently trades for $13. Analysts regard it as fairly valued at its current price. The company has announced that it intends to spend $180 million on an open market repurchase
Management claims that the company's shares are occasionally undervalued and that buying shares at undervalued prices represents a good investment. Assume that the company is able to repurchase shares at a price of $12. There are 275 million shares outstanding prior to the repurchase. What stock price prevails after the repurchase?
A) $9.00
B) $10.77
C) $12.06
D) $13.06
E) $15.60
D
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