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
allochka39001 [22]
3 years ago
10

Fontaine Inc. recently reported net income of $2 million. It has 500,000 shares of common stock, which currently trades at $40 a

share. Fontaine continues to expand and anticipates that 1 year from now, its net income will be $3.25 million. Over the next year, it also anticipates issuing an additional 150,000 shares of stock so that 1 year from now it will have 650,000 shares of common stock. Assuming Fontaine’s price/earnings ratio remains at its current level, what will be its stock price 1 year from now?
Business
1 answer:
Firlakuza [10]3 years ago
4 0

Answer:

$50

Explanation:

Given,

Current Net income = $2,000,000

No. of common shares today = 500,000

Current market price per share = $40

Anticipated Net income in 1 year = $ 3,250,000

Anticipated No. of common shares in 1 year = 500,000 +150000 =650,000

From this data, then

The current Earnings Per Share(EPS) = \frac{2,000,000}{500,000} = 4

Current Price/Earning ratio = \frac{ Price per share}{EPS} = \frac{40}{4} = 10

Anticipated EPS in 1 year=\frac{Anticipated Net income in 1 year }{Anticipated No. of common shares in 1 year } = \frac{3,250,000}{650,000} = $5

If the company's P/E ratio remain as that of the current at 10, then

The anticipated price of stock in 1 year = Anticipated EPS * P/E ratio in 1 year

 = $5 *10 = $50

You might be interested in
By definition, a ________ requires a large amount of learning on the part of users and typically creates new markets and consump
CaHeK987 [17]

Answer:

discontinuous innovation

Explanation:

The discontinuous innovations bring totally new to the world products that are so different from products that already exist that they reshape consumers habits and therefore markets. For example, the personal computer changed the way we live and work.

7 0
3 years ago
The types of resources needed by a business are financial, physical, and labor resources.
sukhopar [10]

Answer:

a. True

Explanation:

The above is true because financial resources are needed to enable a business meet up with its daily activities in terms of funding. Also, physical resources are buildings, machineries and assets in general which are required to carry a business daily operations. The labor resources, which is the most important resources are the workforce that carry out the day to day operations of a business.

8 0
3 years ago
How media you have seen/used/participate in has depicted canada and how it has shaped your understanding and knowledge of the co
ss7ja [257]

Answer:

Explanation:

B

7 0
3 years ago
Capital structure decisions include determining: Group of answer choices The terms of a bond issue to fund a project. the amount
IgorC [24]

Answer:

The correct answer is letter "A": The terms of a bond issue to fund a project.

Explanation:

Capital structure is the mixture of a company's debt and equity to fund its long-term operations and growth. Common stock is the most common type of capital for publicly traded companies, which typically forms the majority of a company's stock ownership. Bonds are another firm companies raises funds from under a repayment promissory note. Capital structure helps investors to assess the optimal value of a firm's capital expense.

5 0
3 years ago
How would you advise Johnson & Johnson on addressing the claim that their talcum powder (baby powder) causes ovarian cancer?
victus00 [196]

Answer:

An example email to the company:

Dear Sirs:

I have recently been in contact with some sources that have told me that you baby Powder may be causing ovarian cancer. I would respectfully ask you to look into this issue, as your product may be harming young children.

Thank you for your time,

_Your name herE_

6 0
3 years ago
Read 2 more answers
Other questions:
  • Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good,
    8·1 answer
  • When secondary market buyers and sellers of securities meet in one central location to conduct trades the market is called:
    14·1 answer
  • The European Commission, the Council of Ministers, the European Parliament, and the Court of Justice are institutions of the ___
    15·1 answer
  • Discount factor is 0.985. Stock XYZ is selling for $40 a share. An American option on this stock with a strike price of $38 is t
    5·1 answer
  • The introduction (or opening) of a business report or proposal should always
    15·1 answer
  • Susan’s customers are always concerned about what they are receiving in exchange for what they are paying. They are concerned ab
    7·1 answer
  • At the beginning of the year, Oak Corp. (an S corporation) had $50,000 in its AAA, $30,000 of earnings and profits from prior C
    11·1 answer
  • One of the safest and easiest investments for young people is: A Stocks and Bonds. OB. Mutual funds. OC. NCUA or FDIC Insured ce
    11·1 answer
  • Dufner Co. issued 14-year bonds one year ago at a coupon rate of 7.9 percent. The bonds make semiannual payments. If the YTM on
    5·1 answer
  • Cameron visits a sporting goods store to buy a new set of golf clubs. He is willing to pay $750 for the clubs but buys them on s
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!