Question
You are trying to determine if there has been any creation of value for Apple Company. The company had a book value of $375. There
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You are trying to determine if there has been any creation of value for Apple Company.
The company had a book value of $375.
There is a constant discount rate of 8.75%.
There is a one time net amount of cash returned to shareholders of $895.
The time period is 8 years.
Calculate the present value discount factor as 1/(1 + 8.75%)^8.
What is the market value of the stock and the resulting market/book ratio?
a. Market Value = $457.50; Market/Book Ratio = 1.22
b. Market Value = $457.50; Market/Book Ratio = 1.55
c. Market Value = $475.50; Market/Book Ratio = 2.12
d. Market Value = $754.50; Market/Book Ratio = 1.22
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Corporate Finance Principles And Practice
Authors: Denzil Watson, Tony Head
1st Edition
0273630083, 978-0273630081
