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ollegr [7]
3 years ago
9

Cute Camel Woodcraft Company just reported earnings after tax (also called net income) of $9,750,000 and a current stock price o

f $39.50 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 2,900,000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,400,000)
If Cute Camel's forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does the company's management expect its stock price to be one year from now?
(Note: Round any EPS calculations to two decimal places, and round any P/E ratio calculation to four decimal places.)
a. $32.36 per share
b. $39.50 per share
c. $24.27 per share
d. $40.45 per share
One year later, Cute Camel's shares are trading at $47.12 per share, and the company reports the value of its total common equity as $54,364,800. Given this information, Cute Camel's market-to-book (M/B) ratio is ____.
Is it possible for a company to exhibit a negative EPS and thus a negative P/E ratio?
a. No
b. Yes
Business
1 answer:
Assoli18 [71]3 years ago
7 0

Answer:

Explanation:

a)

earning per share =  Net income / outstanding shares  

= $9,750,000 / 5,500,000  = $1.77

price earning ratio = Current stock price \  earning per share

= $39.50 \ $1.77  = 22.32

new Earning per share = Net income / outstanding shares

= $9,750,000 * 125% / 8,400,000  = $1.45

the stock price after one year would be

= Price earning ratio * New earning per share  = 22.32 * $1.45  = $32.36

b)

Market to book ratio = Market value/ book value  

Market value = Share price * number of outstanding shares

= $47.12 * 8,400,000 shares  = $395,808,000

book value is $54,364,800

M/B = $395,808,000 / $54,364,800  = 7.28 times

Is it possible for a company to exhibit a negative EPS and thus a negative P/E ratio?

Yes, if company is having losses

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Benjamin and Amelia Hopkins have been married since 2016.
Neporo4naja [7]

Answer:

1. c. Both a and b

2. a. Yes, because Benjamin has a Social Security number.

Explanation:

According to tax laws, you can claim a child tax credit for an American dependant below the age of 17 which qualifies Harper for it. Evelyn however qualifies for a Credit for other dependents as she is a resident alien and has an Individual Taxpayer Identification Number (ITIN).

Because Benjamin has a Social Security Number, the Hopkins are indeed eligible to claim an earned income credit. Married couples filling jointly can claim the credit if either of them are U.S. citizens with a valid Social Security number.

3 0
3 years ago
The manager of a major retail store has taken a random sample of 25 customers. The average sale was $52.50. The population stand
Anna35 [415]

Answer:P value = 1 - 0.9793 = 0.0207

Explanation:

we can use Z value and normal distribution to find P value. P value is the area of beyond the value of Z value

sample mean (x.bar) = $52.20

Population mean (U) = $50

Sample Standard deviation (Sd) =$ 6.10

sample (n) = 25

Z =\frac{(x.bar - U)}{Sd/\sqrt{n} } =\frac{52.50 - 50}{6.10/\sqrt{25} }

Z = 2.50/1.22 = 2.049280328 = 2.049

area (normal distribution table) = 0.9793

P value = 1 - 0.9793 = 0.0207

7 0
3 years ago
Which of the following would cause an increase in a country's aggregate demand?
Leona [35]
<span>b) The nominal interest rate falls as the country's price level falls.
</span>
3 0
3 years ago
Which situation would increase the scarcity of a product?
Anestetic [448]

Answer:

B. one of only 2 factories that made the product shuts down.

7 0
2 years ago
Which of the following describes the expected outcome of expansionary monetary policy in the short run?
Vaselesa [24]

Answer:

The correct answer is letter "A": higher employment, higher output, and a higher price level.

Explanation:

Expansionary policy is a macroeconomic concept that focuses on expanding the economy to counteract cyclical downturns. Expansionary policies can be used through monetary policy to expand the money supply or to increase government expending and tax cuts to stimulate the economy. Under this scenario, interest rates are lower and aggregate demand increases. In that case, employment, output, and price level will be higher. Though, the latter is dangerous since it could lead to high inflation.

7 0
3 years ago
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