Given a 2014 share repurchase plan of $4 billion, an average share price of $60 for the year 2013, and expected EPS growth for 2014 of 10%, what should be the number of shares repurchased by the company be in your financial model?

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Multiple Choice

Given a 2014 share repurchase plan of $4 billion, an average share price of $60 for the year 2013, and expected EPS growth for 2014 of 10%, what should be the number of shares repurchased by the company be in your financial model?

The key idea is to convert the planned buyback in dollars into a number of shares using the expected price per share in the year of the buyback. Since earnings per share are projected to grow 10% in 2014, you typically model the 2014 stock price as price in 2013 grown by that amount: 60 × (1 + 0.10) = 66.

Then the number of shares repurchased is the plan amount divided by the expected price per share: 4,000,000,000 / 66 ≈ 60,606,060 shares, which is about 60.6 million.

Choosing 60.6 million reflects using the 2014 anticipated price (66) rather than the 2013 price (60), aligning the buyback with the projected earnings-driven price change.

Given a 2014 share repurchase plan of $4 billion, an average share price of $60 for the year 2013, and expected EPS growth for 2014 of 10%, what should be the number of shares repurchased by the company be in your financial model?

Prepare for your Financial Statement Modeling Test. Utilize flashcards and multiple choice questions with detailed explanations. Ace your exam with thorough preparation!

Given a 2014 share repurchase plan of $4 billion, an average share price of $60 for the year 2013, and expected EPS growth for 2014 of 10%, what should be the number of shares repurchased by the company be in your financial model?

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