Repurchase proposal

Share repurchase proposal: Currently, the firm has available capital (cash and net
income) of approximately $7,000,000. There is a large block of stock available at $35
a share.
What are the benefits of repurchasing shares? How will this affect the capital structure
of the company? How can this be interpreted in the marketplace?
Suppose the market price of the shares is $35.75 a share. Why do you think the seller
of the large block would agree to see at $35 a share?
Suppose the assumptions of MM are true, then what would happen to the market price
of shares once the purchase of the large block at $35 a share is completed? Would it
rise above $35.75, remain unchanged or fall?