Question

The Digby's balance sheet has $118,139,000 in equity. Further, the company is expecting $3,000,000 in net income next year. Assuming no dividends are paid and no stock is issued, what would their Book Value be next year?

Answer 1

Answer:

Book Value Per Share = 22.55

Explanation:

given data

equity = $118,139,000

net income next year = $3,000,000

to find out

what would their Book Value be next year

solution

we know that Book Value Per Share formula that is express as

Book Value Per Share = (Share Holder Equity+ Net Income) ÷ No of Shares ..................1

we consider here book value is $22

So no of share will be = $\frac{share\ holder}{book value}$

No of shares = $\frac{118,139,000}{22}$

No of shares = 5369954.545

so from equation 1 put here value

Book Value Per Share = $\frac{118,139,000 +3,000,000}{5369954.545}$

Book Value Per Share = 22.55