Answer and Explanation:
a. The computation of the current price per share is shown below:
Current price per share = Value of Firm ÷ Number of stock outstanding
where,
Value of Firm is
= $800,000 ÷ 1.13 + $1,250,000 ÷ 1.13^2
= $1,686,897.96
And, the number of outstanding shares is 35,000 shares
So, the current share price is
= $1,686,897.96 ÷ 35,000 shares
= $48.20
c. The computation of the shares of stock sold is shown below:
No of shares of stock must be sold is
= ($910,000 - $800,000) ÷ 48.20
= $2,282.16
c. The computation of the new price per share of stock is shown below:
Current price per share = Value of Firm ÷ Number of stock outstanding
where,
Value of Firm is
= $910,000 ÷ 1.13 + $1,250,000 ÷ 1.13^2
= $1,784,243.09
And, the number of outstanding shares is 35,000 shares and $2,282.16
So, the current share price is
= $1,784,243.09 ÷ 35,000 shares + $2,282.16
= $47.86
