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
In his work for a new company, Byron found a flower material that he could use to manufacture dresses. In his career, Byron is m
RSB [31]

Answer:

into how many geographical region Nepal has divided ?describe them in a few line

3 0
3 years ago
Read 2 more answers
Ploeger Corporation has provided the following contribution format income statement. Assume that the following information is wi
Crazy boy [7]

Answer:

Break-even point (dollars)= $234,000

Explanation:

Giving the following information:

Sales (4,000 units) $ 240,000

Variable expenses 156,000

Fixed expenses 81,900

To calculate the break-even point in dollars, first, we need to determine the selling price and unitary variable cost:

Selling price= 240,000/4,000= $60

Unitary variable cost= 156,000/4,000= $39

Now, we can calculate the break-even point:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 81,900/ [(60 - 39) / 60]= $234,000

8 0
3 years ago
Problem 3.22: Trade Deficits and J-curve Adjustment Path Assume the United States has the following import/export volumes and pr
Sergio039 [100]

Answer:

The pre-devaluation cost is ($880) and the pst-devaluation trade balance is ($1398)

Explanation:

Assumptions Values

Initial spot exchange rate, $/fc $2.00

Price of exports, dollars ($) * 20.0000

Price of imports, foreign currency (fc) * 12.0000

Quantity of exports, units * 100

Quantity of imports, units * 120

Percentage devaluation of the dollar 18.00%

Price elasticity of demand, imports * (0.900)

a. The pre-devaluation trade balance--

Revenues from exports, $ $2,000

Expenditures on imports, fc * 1,440

Expenditures on imports, $ $2,880

Pre-devaluation trade balance ($880)

b. Resulting trade balance immediately after devaluation

Revenues from exports, $ $2,000

Expenditures on imports, fc * 1,440

New spot exchange rate, after devaluation $2.36

Expenditures on imports, $ $3,398

Post-devaluation trade balance (currency contract period) ($1,398)

8 0
3 years ago
Aztec Company reports current E&P of $200,000 in 20 X 3 and accumulated E&P at the beginning of the year of negative $10
kondaur [170]

Answer:

How much of the distribution is treated as a dividend in 20X3?

100000

Explanation:

E&P CURRENT       200000

E&P ACCUMULATE -100000

Dividend                   100000

3 0
2 years ago
Custom Computers, Inc. assembles custom home computer systems. The heat sinks needed are bought for $14 each and are ordered in
belka [17]

Answer:

EOQ = 609.91 units

Average inventory= 600 units

Number of orders = 5.2 times

Annual inventory holding cost =$1,200

Annual ordering cost = $312

Total cost = $88,312

Explanation:

EOQ =√ (2× Co× D)/Ch

EOQ= ? , Co-60, Ch- 2, D- 6200

EOQ = √(2× 60× 6200/2)

EOQ = 609.9180273

Average inventory =  minimum level +EOQ/2

= 1200 /2 = 600 units

Number of orders = Annual demand/ order quantity

                     = 6,200/1200 =  5.166

Number of orders = 5.2 times

Annual inventory holding cost = Average inventory × holding cost per unit

        =600 × $2 =$1,200

Annual ordering cost = No of orders × ordering cost per order

                        = 5.2 times × 2 =$312

Annual inventory cost = Purchase cost + Ordering cost + Holding cost

Purchase cost=Annual demand× unit price 14× 6200= 86,800

Total cost = 86,800  + $1,200+ $312

                =88312

8 0
2 years ago
Other questions:
  • Consider the overall market for beverages in the US. This market consists of both alcoholic and non-alcoholic drinks. Within the
    9·1 answer
  • Handy hiking produces backpacks. In 2007, its highest and lowest production levels occurred in july and january, respectively. I
    11·1 answer
  • Runaround Corporation sells running shoes and during January they ran production machines for 29 comma 000 hours total and incur
    9·1 answer
  • There are benefits to having only permanent employees at a company, and there are benefits to replacing such employees with temp
    9·2 answers
  • A firm wants to create a WACC of 11.2 percent. The firm's cost of equity is 16.8 percent and its pretax cost of debt is 8.7 perc
    14·1 answer
  • Sixx AM Manufacturing has a target debt—equity ratio of 0.53. Its cost of equity is 19 percent, and its cost of debt is 11 perce
    10·2 answers
  • In the following​ statements, who is a free rider​?
    8·1 answer
  • Which of the following is likely to happen if employees think that their organization is
    12·1 answer
  • The terms of trade can take on any value Group of answer choices above the seller's opportunity cost. below the seller's opportu
    8·1 answer
  • Being debt free within the next 15 years is an example of which goal
    9·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!