1. The KokaKola Company has $1 million in excess cash it wishes to return to stockholders. Selected financial information is as follows. If KokaKola chooses to distribute the cash through a stock repurchase and the price earnings ratio doesn't change through the transaction, what will the stock's market price be after the shares are acquired? Givens:
Earnings after taxes $2,500,000
Shares of stock outstanding 1,000,000
Price-earnings ratio 10
Market price of KokaKola's stock $25
2. The following monthly data are available for Ellison Company which produces only one product: Selling price per unit, $66.00; Unit variable expenses, $39.60; Total fixed expenses, $8,000; Actual sales for the monthly of June, 800 units. How much is the margin of safety (in dollars) for the company in June?
$13,120
$48,000
$21,120
$32,800