Question
The ABC Company has the following capital structure: Paid in Capital $100,000 Retained Earnings 50,000 Total Shareholders Equity $150,000 Average historical maintainable earnings for the
The ABC Company has the following capital structure:
Paid in Capital $100,000
Retained Earnings 50,000
Total Shareholders Equity $150,000
Average historical maintainable earnings for the past 5 years were $60,000 and the companys average cost of capital is 12%.
Required: Calculate the Earnings Capacity Value(ECV) of
(i) The Company
(ii) $1.00 of Shareholders Equity
please include the process)
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Personal Financial Planning
Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk
14th edition
978-1305887725, 1305887727, 1305636619, 978-1305636613
