Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Marker, Incorporated, wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $30 per share,

image text in transcribed
Marker, Incorporated, wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $30 per share, but the book value per share is $8. Net income is currently $4.8 million. The new facility will cost $45 million, and it will increase net income by $960,000. Assume a constant price-earnings ratio. a-1. Calculate the new book value per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-2. Calculate the new EPS. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) a-3. Calculate the new stock price. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-4. Calculate the new market-to-book ratio. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) b. What would the new net income for the company have to be for the stock price to remain unchanged? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Primary English Audit And Test Assessing Your Knowledge And Understanding

Authors: Doreen Challen

2nd Edition

190330086X, 978-1903300862

More Books

Students also viewed these Accounting questions

Question

How would you describe the decision-making process at Graeters?

Answered: 1 week ago

Question

What is the preferred personality?

Answered: 1 week ago

Question

What is the relationship between humans?

Answered: 1 week ago