New Ventures Ltd (NVL) specializes in taking underperforming companies to a higher level of performance NVLs capital structure at December 31, 2009, included 12,000 shares of $2 20 preferred stock and 130,000 shares of common stock During 2010, NVL issued common stock and ended the year with 138,00...

Req 1 Earnings per share Income from continuing operations ...

New Ventures Ltd. (NVL) specializes in taking underperforming companies to a higher level of performance. NVLs capital

Question:

New Ventures Ltd. (NVL) specializes in taking underperforming companies to a higher level of performance. NVLs at December 31, 2009, included 12,000 shares of $2.20 preferred stock and 130,000 shares of . During 2010, NVL issued and ended the year with 138,000 shares of outstanding. Average common shares outstanding during 2010 were 134,000. Income from continuing operations during 2010 was $225,000. The company discontinued a segment of the business at a loss of $66,000, and an extraordinary item generated a gain of $48,000. All amounts are after income tax.

Requirements
1. Compute NVLs earnings per share. Start with income from continuing operations.
2. Analysts believe NVL can earn its current level of income for the indefinite future.
Estimate the market price of a share of NVL at investment capitalization rates of 9%, 11%, and 13%. Which estimate presumes an investment in NVL is the most risky? How can you tell?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a...