Filner Cosmetics in Problem P11-35A holds significant promise for carving a niche in its industry. A group of Canadian investors is considering purchasing the company's outstanding common stock. Filner's stock is currently selling for $32 per share.
A Financial Markets Magazine story predicted the company's income is bound to grow. It appears that Filner can earn at least its current level of income for the indefinite future. Based on this information, the investors think that an appropriate investment capitalization rate for estimating the value of Filner's common stock is 8%. How much will this belief lead the investors to offer for Filner Cosmetics? Will Filner's existing stockholders be likely to accept this offer? Explain your answers.
Problem P11-35A
The following information was taken from the records of Filner Cosmetics, Inc., at December 31, 20X8.

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Dividends on common stock.$37,000 23,000 . 8,000 11,000 Prior-period adjustment debit to Retained Earnings..$ 4, s 4,000 28,000 2,000 Interest expense. Income tax expense (saving): Dividend reven Treasury stock, common Continuing operations Income from discontinued operations. Extraordinary loss (2,000 shares at cost) 71,000 567,000 (10,800) Loss on sale of plant assets Income from discontinued General expenscs. Sales revenue Retained earnings, beginning, operations 7,000 Preferred stock, 6%, $25 par, Selling expense Common stock, no par, 87,000 100,000 22,400 319,000 4,000 shares issued. Extraordinary loss Cost of goods sold. 22,000 shares authorized and issued 350,000