Lancaster bakery has net fixed assets of $329,700, current assets of $87,200, a price-earnings ratio of 12.8, a debt-equity rati
1 answer:
Market to book ratio is the ration of market price per share divided by the book value per share, it can be mathematically expressed as below:
Market to Book Value=
In this problem the first step is to find Market Value per share
PE Ratio is given by the following formula:
PE Ratio=
12.8=
Market Price Per Share=$25.216
We now find Book Value Per Share, Book Value is nothing but the Equity Value of the Organization, In the given problem, we don't have this information, but we have total assets, which amounts to $416900($329700+$87200). Using Debt Ratio we can find book value per share as below:
Lets assume Shareholders Equity is x, Thus total liability will be Total Assets-x
Debt Equity Ratio is given as below:
Debt Equity Ratio=
0.42=
x=$293592
Book Value per share=$293592/36000
Book Value per Share=8.155
Market to book value=25.216/8.15533
Market to book value ratio= 3.09
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Answer:
Ans. Your monthly payments will be $1,602.37 ; The effective annual rate is 5.33%
Explanation:
Hi, first, we need to convert this APR rate into an effective monthly rate, that is, dividing 0.052/12 =0.00433 (or 0.4333%). Then we need to use the following equation and solve for A.
Where:
PresentValue= 84,500
A = periodic payments (the monthly payments that you need to make)
r = 0.004333333
n=60 months
So, let´s solve for A.
Now, in order to find the effective annual rate, we need to use the following equation.
Notice that to find an effective rate you have to start with another effective rate, otherwise it won´t work. So everything should look like this.
Meaning that the equivalent effective annual rate to 5.2% APR is 5.33% effective annual.
Best of luck.