Question
Book versus Market value: Suppose that the market value (in thousands of dollars) of Fincorp's fixed assets in 2014 is $6000 and that the value
Book versus Market value:
Suppose that the market value (in thousands of dollars) of Fincorp's fixed
assets in 2014 is $6000 and that the value of its long-term debt is only
$2,200. In addition, the consensus among investors is that Fincorp's past
investment of course does not show up on the balance sheet. What will be the
price per share of Fincorp stock?
2013 2014
4000 4100 Revenue
1600 1700 Cost of goods sold
500 520 Depreciation
300 350 Inventories
500 550 Administrative expenses
150 150 Interest expense
400 420 Federal and state taxes*
300 350 Accounts Payable
400 450 Accounts Receivable
5000 5800 Net fixed assets
2000 2400 Long-term debt
1000 600 Notes payable
410 410 Dividends paid
800 300 Cash and marketable securities
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