Calculate the new book value per share

Assignment Help Finance Basics
Reference no: EM1355819

A company currently has 10 million shares outstanding and no debt. They wish to expand. The stock sells for $50 per share, but the book value per share is $20. Net income for the company is currently $18 million. The new facility will cost $40 million and it will increase new income by $500,000.

Calculate the new book value per share, the new total earning, the new EPS, the new stock price, and the new market-to-book ratio.

Assuming an instant price-earning ration what will the effect be of issuing new equity to finance the investment?

What would the new net income for the company have to be for the stock price to remain unchanged?

 

Reference no: EM1355819

Questions Cloud

Illustrate what is the maximum profit : Illustrate what is the maximum profit. Suppose that the fixed cost rises to $200,000. How would this affect the profit-maximizing price.
Importance and usefulness of accounting cycle : Please discuss the value of the accounting cycle to a company including: Normal length of the cycle-Integration with required governmental reporting
Describing use of kerberos for mutual authentication : Answer the following in relation to a scenario where Bob and Alice use Kerberos for mutual authentication. When Bob receives a ticket from Alice, how does he know it is genuine?
Diversity and multiculturalism : Discuss how ethical codes address diversity perspectives and multicultural concerns. What are the strengths and limitations of these codes concerning diversity and multiculturalism?
Calculate the new book value per share : A corporation currently has 10 million shares outstanding and no debt. They want to expand. The stock sells for $50 per share, but the book value per share is $20.
Discussion questions for global business management : Explain what are some questions that can be use as a weekly discussion questions for Global Business Management?
Stocks-equity and journal entries : The Cosmo Company was started by issuing 800 shares of $10 par value stock at an average market price of $20 per share. Prepare journal entries to record the treasury stock transactions. Prepare the equity section of the balance sheet for Cosmo Compa..
Show cultural differences : Would you agree that there are more commonalities than differences and that opening that door of commonalities we will be able to have a newer approach about threats?
Civil war change any opportunity price in the south : In what did the South have a comparative advantage. Did the Civil War change any opportunity price in the South.

Reviews

Write a Review

Finance Basics Questions & Answers

  Future and present values of lump sum amount

Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the first time. What if you left money till your 65th birthday? How much money did your grandfather o..

  Calculate amortization

Reymont Company applied for a trade name, incurring legal costs of $18,000. In January of 2010, Reymont incurred $7,800 of legal fees in a successful defense of its trade name.

  Determining derivative securities

Choose a company of your choice and based upon its industry affiliation, identify and describe what types of derivative securities the company might use to reduce its risk exposure.

  Discuss interest-floatation costs-call premium

Explanation of a specific item, for example, interest, floatation costs, call premium, of how to employ refunding tools and techniques to minimize cost of capital.

  How the changes affected the financial analysis process

How have these changes affected the financial analysis process and are these changes beneficial to financial professional?

  Determine the value of the total assets

The only non-current liabilities of the company is the debentures. The firms coupon bonds are currently sold at $912 a unit and have a maturity of ten years No preference shares have been issued.

  Formula for present value of settlement payments

A court settlement awarded an accident victim four payments of the $50,000 to be paid at the end of each of next four years.

  Calculate cash conversion cycle

Strickler technology is thinking changes in its working capital policies to improve its cash flow cycle. Strickler's sales last year $3,250,000 (all on credit), & its net profit margin was 7 percent.

  Determine value of the preferred share

A company issued a preferred stock which matures in thirty years and carries a maturity value of $45. The dividend is $4 per year over the 30 year period.

  Periodic annuity amounts and present value of deferred

If I borrow 60,000 from bank at 10% interest over the seven-year life of loan, what equal annual payments should be made to discharge the loan plus pay the bank its required rate of interest. Annual payments_____.

  Determine the minimum cost of capital point

The Millennium Charitable Foundation, which is tax exempt firm, issued debt last year at 8 percent to help finance a new playground facility in Chicago.

  Offering recommendation based on financial statement

Offering recommendation based on financial statement analysis where Grannie is concerned that her net income has been dropping

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd