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Ret has 100 million shares outstanding, a current share price of $25, and no debt....

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Accounting

Ret has 100 million shares outstanding, a current share price of $25, and no debt. Rets management believes that the shares are underpriced, and that the true value is $30 per share. Ret plans to pay $250 million in cash to its shareholders by repurchasing shares. Management expects that very soon new information will come out that will cause investors to revise their opinion of the firm and agree with Ret assessment of the firm's true value. Assume that Ret is able to repurchase shares prior to the market becoming aware of the new information regarding Rets true value. After the repurchase, and following the release of the new information regarding the true value of Ret, the firm's share price is closest to _________.
  • A. $30.60
  • B. $31.50
  • C. $28.75
  • D. $30.00

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