1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ostrovityanka [42]
3 years ago
10

Walker Machine Tools has 6.5 million shares of common stock outstanding. The current market price of Walker common stock is $72

per share rights-on. The company’s net income this year is $22.50 million. A rights offering has been announced in which 650,000 new shares will be sold at $66.50 per share. The subscription price plus seven rights is needed to buy one of the new shares. a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round intermediate calculations and round your answers to 2 decimal places.) b. What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round intermediate calculations and round your answers to 2 decimal places.)
Business
1 answer:
Ksivusya [100]3 years ago
3 0

Answer:

(a) Earnings per share = Net income ÷ Number of shares

= $22,500,000 ÷ 6,500,000

= $3.46

Price-earnings ratio = Stock price ÷ Earnings per share

= $72 ÷ $3.46

= 20.81

(b) Earnings per share = Net income ÷ Number of shares

= $22,500,000 ÷ (6,500,000 + 650,000)

= $3.15

R = (M0 - S) ÷ (N + 1)

= ($72 - $66.50) ÷  (7 + 1)

= $0.69

where,

M0 = current market price of Walker common stock

S = selling price per share

N = seven rights is needed to buy one of the new shares

Ex-rights price = Rights-on price - Rights value

= $72 - $0.69

= $71.31

Price-earnings ratio = Stock price ÷ Earnings per share

= $71.31 ÷ $3.15

= 22.64

You might be interested in
Cougar Corporation bought inventory on account on August 23rd. Cougar paid its supplier for the inventory on August 28th. Cougar
Aloiza [94]

Answer:

"B"

Explanation:

Expenses are recognized under the accrual accounting principle.

Before expenses can be recognized under accrual method , it must be matched to a particular revenue.This means that expenses are recognized in the period that the expense was able to generate a revenue. In other words , it in recorded in the period in which it was sold and not the period it was bought.

This is done to improve the quality , accuracy  of financial statement to give a true representation of an organization.

4 0
3 years ago
What criteria do accountants use to decide whether to use present or future values in accounting statements?
Airida [17]

Answer:

Present value is nothing but how much future sum of money worth today. It is one of the important concepts in finance and it is a basis for stock pricing, bond pricing, financial modeling, banking, and insurance, etc. Present value provides us with an estimated amount to be spent today to have an investment worth a certain amount of money at a specific point in the future. Present value is also called a discounted value. It is an indicator for investors that whatever money he will receive today can earn a return in the future. With the help of present value, method investors calculate the present value of a firm’s expected cash flow to decide if a stock is worth to invest today or not.

The formula for calculating PV is shown below

PV = CF/ (1+r)n

Here ‘CF’ is future cash flow, ‘r’ is a discounted rate of return and ‘n’ is the number of periods or year.

Example

Let’s say that you have been promised by someone that he will give you 10,000.00 Rs 5 year from today and interest rate is 8% so no we want to know what the present value of 10,000.00 Rs which you will receive in future so,

PV = 10,000/ (1+0.08)5

PV = 6805.83 (To the nearest Decimal)

So present-day value of Rs 10,000.00 is Rs 6805.83

Explanation:

5 0
2 years ago
What kind of policy can a company implement that can help diminish the activity of sending unsolicited email?
klemol [59]

Answer:

anti-spam policy

Explanation:

Spam emails are unsolicited emails that are usually sent to a large number of people. Therefore, if the company is trying to reduce unsolicited emails (spam) it should carry out an anti-spam policy.

The problem with spam is that it creates a negative image of the company, since current or potential clients can get annoyed by receiving so many unsolicited emails with advertisements or promotions. Instead of helping the company, spam email damages its.

8 0
3 years ago
A company recently announced that it would be going public. The usual suspects, Morgan Stanley, JPMorgan Chase, and Goldman Sach
Deffense [45]

Answer:

$42.5 billion

Explanation:

the expected value formula = ∑ (valueₙ x probabilityₙ)

expected value = (low value x probability of low value) + (most likely value x probability of most likely value) + (high value x probability of high value)

= ($5 billion x 20%) + ($45 billion x 70%) + ($100 billion x 10%) = $1 billion + $31.5 billion + $10 billion = $42.5 billion

8 0
3 years ago
The theory of rational behavior
romanna [79]

Answer:

The correct answer is letter "C": is an assumption that economists make to have a useful model for how decisions are made.

Explanation:

Rational Behavior guides the decision-making process towards choices that maximize individuals' benefits. Most economic theories assume that any individual taking part in action or activity is behaving rationally. Given the choice, people would choose something that increases their satisfaction.

6 0
3 years ago
Other questions:
  • Green hybrid auto corporation pays its executives an excessive amount relative to what lower-level employees at the company rece
    15·1 answer
  • __________ are such things as product, price, place, and promotion and are considered part of the environment that influences th
    11·1 answer
  • Americans earn more than most others throughout the world.  Why is this?  Is it because we are smarter, stronger, or more physic
    5·2 answers
  • Maxwell and Smart are forming a partnership. Maxwell is investing a building that has a market value of $180,000. However, the b
    12·1 answer
  • You are working at a practice that has a very busy daily schedule and needs to standardize the times when statements are handled
    5·1 answer
  • Paladin Furnishings generated $4 million in sales during 2016, and its year-end total assets were $2.6 million. Also, at year-en
    11·1 answer
  • During the first two years, Supplies, Inc. drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise
    7·1 answer
  • When a seller breaches a sales contract, the Uniform Commercial Code (UCC) provides the buyer with an option to take immediate s
    11·1 answer
  • Magnira Corp. is an apparel company. After a slow start, it saw a steep rise in the number of its customers and a remarkable inc
    11·1 answer
  • Professional etiquette suggests you should send a(n) ____ to each person who agrees to meet with you in support of your career e
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!