Answer:
The correct answer is D.
Explanation:
Equity = $231,000
No. of outstanding shares = 5,000
Price of share = [tex]\frac{231,000}{5000}[/tex]
Price of share = $46.2
Repurchased shares worth $18,000
No. of shares repurchased = [tex]\frac{18,000}{46.2}[/tex]
No. of shares repurchased = 390
When the shares would have been repurchased then the value of equity would decrease by the same amount.
Revised equity = $231,000 - $18,000
Revised equity = $213,000
No. of shares outstanding = 5,000 - 390
No. of shares outstanding = 4,610
Thus, the price of each share would be:
Share price = [tex]\frac{213,000}{4,610}[/tex]
Share price = $42.60
