AMCAMC 

Corporation currently has an enterprise value​ (EV) of 

$ 370$370 

million and 

$ 100$100 

million in excess cash. The firm has 

1010 

million shares outstanding and no debt. Suppose 

AMCAMC 

uses its excess cash to repurchase shares. After the share​ repurchase, news will come out that will change 

AMCAMC​'s 

enterprise value to either 

$ 570$570 

million or 

$ 170$170 

million. What is 

AMCAMC​'s 

share price prior to the share​ repurchase? 

Question content area bottom

Part 1

AMCAMC​'s 

share price prior to the share repurchase is 

​$enter your response here. 

 ​(Round to the nearest​ cent.)

To determine AMCAMC's share price prior to the share repurchase, we'll follow these steps:

### Step 1: Identify the total market value of the firm (pre-repurchase).
The total market value of AMCAMC is the sum of its enterprise value and excess cash. The enterprise value (EV) represents the value of the operating business, and the cash is an additional asset for shareholders.

\[
\text{Total Market Value (Pre-Repurchase)} = \text{Enterprise Value} + \text{Excess Cash}
\]

Given:
- Enterprise Value (EV) = $370 \text{ million}
- Excess Cash = $100 \text{ million}

\[
\text{Total Market Value (Pre-Repurchase)} = 370 + 100 = 470 \text{ million dollars}
\]

### Step 2: Calculate the share price before the repurchase.
To find the share price, divide the total market value by the number of shares outstanding:

\[
\text{Share Price} = \frac{\text{Total Market Value}}{\text{Shares Outstanding}}
\]

Given:
- Shares Outstanding = 10 million

\[
\text{Share Price} = \frac{470 \text{ million}}{10 \text{ million}} = 47 \text{ dollars per share}
\]

### Conclusion:
The share price of AMCAMC prior to the repurchase is **$47.00**.

---

Do you want further details or have any questions? Here are five follow-up questions to expand your understanding:

1. How will the share repurchase affect the remaining shareholders?
2. What happens to the enterprise value after the repurchase?
3. How does excess cash influence a company's market value?
4. Why is AMCAMC repurchasing shares instead of paying dividends?
5. What are the effects of changes in enterprise value on stock price?

**Tip:** Share repurchases can increase the value of remaining shares by reducing the total number of shares outstanding, leading to higher ownership for each shareholder.

AMCAMC Corporation currently has an enterprise value (EV) of $370 million and $100 million in excess cash. The firm has 10 million shares outstanding and no debt. Suppose AMCAMC uses its excess cash to repurchase shares. After the share repurchase, news will come out that will change AMCAMC’s enterprise value to either $570 million or $170 million. What is AMCAMC’s share price prior to the share repurchase?

Calculate AMCAMC Corporation's share price prior to a share repurchase using enterprise value and excess cash. This finance problem explains key concepts in market value and share price calculations, ideal for undergraduate finance students.

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