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S_A_V [24]
3 years ago
9

Enscoe Enterprises, Inc. (EEI) has 220,000 shares authorized, 180,000 shares issued, and 20,000 shares of treasury stock. At thi

s point, EEI has $880,000 of assets. $240,000 liabilities, $400,000 of common stock, and $240,000 of retained earnings. Further, assume that the market value of EEI's common stock is $6 per share.Required:a. Determine the number of shares of stock that is outstanding. b. Determine the book value per share. e. Provide a rational explanation for the difference between the book value per share and the market value per share of Mrs common stock.
Business
1 answer:
son4ous [18]3 years ago
5 0

Answer:

Enscoe Enterprises, Inc. (EEI):

a) Number of shares of stock outstanding is 160,000 shares (180,000 minus 20,000).

b) The book value per share = (value of common stock plus retained earnings) divided by outstanding shares

= $(400,000+ 240,000)/160,000 =  $640,000/160,000 = $4 per share

c) The book value per share represents how the equity shares are valued in the company's accounting records.  This may not be similar to the market value per share.  The market value per share is determined by market sentiments, which cannot be historically accounted for as the book value is.

The book value per share can be compared to the market value per share to determine if a stock is overvalued or undervalued.

At liquidation, the book value per share represents what each shareholder would get if all the assets are sold and liabilities liquidated.  But, the market value per share is what the investor gets if she sells the stock in the market without waiting for the company to be liquidated.

Explanation:

a) Treasury Stock is a contra account to the Common Stock.  When stock is repurchased it reduces the issued shares by the number.  It is only the outstanding stock that has equity interest in the entity.

b) The book value per value is the net worth of the company divided by the number of outstanding shares.  It shows the net assets value per share.  The net assets are the total assets minus the total liabilities.  It is the same thing as Equity or the interests of equity stockholders in the company.

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A ________economy usually stresses the equality of all citizens. A________ economy aims to be self-sufficient. A ________economy
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Answer:

Command economy

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Explanation:

A command Economy  stresses the equality of all citizens.e. g Cuba and North Korea

A closed economy aims to be self sufficient with all activities confined to its economy.e.g Brazil's economy.

A traditional economy being the oldest form of economy upholds culture and history and as such relies more on bartering than money. It is mostly common in emerging markets and developing countries.

A mixed economy encourages private businesses with a degree of state monopoly.Example is the USA's economy.

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Let's say you want to open a shoe store that will specialize in high-end shoes. But before you do, you want to determine how man
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Answer:

$240,000

Explanation:

Selling price per pair of shoes $160 x 12,000 ...1,920,000

Cost (to you) per pair of shoes $80 x 12,000 .... $960,000

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Salaries ..........................................................................$420,000

Rent................................................................................ $120,000,

Advertising..................................................................... $20,000,

Insurance .........................................................................$16,000,

Miscellaneous fixed costs ........................................<u>..$24,000,</u>

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A financial statements are helpful to the business owner, employees, and investors because:

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  • It helps to adhere to regulations etc

<h3>What are financial statements?</h3>

This refers to those written records that convey the business activities and the financial performance of a company.

Some examples of financial statements in every standard companies includes Income statement, Cash flow statement, Balance sheet, Note to Financial Statements, Statement of change in equity etc.

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1 year ago
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Both Bond Sam and Bond Dave have 7 percent coupons, make semiannual payments, and are priced at par value. Bond Sam has three ye
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Solution:

Each bonds have a 7 percent coupon limit. Since sales are also equivalent to 7 percent with par with YTM. The age of Bond Sam is three years and the maturity of Bond Dave is sixteen. At a sudden increase of 2%, interest rates. Decide the shift in both bond price by percentage.

Bond Sam:

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Rate = (7%+2%)* 1/2 = 4.5%

nper = 3*2 = 6

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Bond Value = -pv (4.5%,6,35,1000)

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Percentage change in the price of Bond Sam = (936.65-1000)/1000 Percentage change in the price of Bond Sam = -6.33%  

Bond Dave:

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pmt = 7%*1000*1/2 = 35

Bond Value = pv (4.5%,32,35,1000)

Bond Value = $854.66

Percentage change in the price of Bond Dave = (854.66-1000)/1000 Percentage change hi the price of Bond Dave = -14.53%  

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