Estimate the value of equity in the firm

Assignment Help Accounting Basics

Reference no: EM13963227

Now assume that Gemco Jewelers has $10 million in cash and nonoperating assets and that the firm has $15 million in outstanding debt.

a. Estimate the value of equity in the firm.

b. If the firm has 5 million shares outstanding, estimate the value of equity per share.

c. How would your answer to b change if you learn that the firm has 1 million options outstanding, with an exercise price of $5 and five years to maturity? (The estimated value per option is $7.)

Reference no: EM13963227

Questions Cloud

What would be result if riley had been a convicted murderer : Late in the summer, Berry asked Wagner to bale the hay as he had done the previous year and bill Record for the work. He did so, but Record refused to pay on the ground that Berry was not then his agent.

Dividends and working capital requirements : The beta of the stock is 1.05, and there were 200 million shares outstanding (trading at $60 per share), with a book value of $5 billion. Union Pacific paid 40 percent of its earnings as dividends and working capital requirements are negligible. (..

Describe the organization with a brief description : Prepare an 11- to 15-slide Microsoft PowerPoint presentation for the senior management team based on the business problem or opportunity you described. Include the following in your presentation: Introduction slide, Agenda slide and Describe the o..

What uncertainty in momentum of proton under same condition : Estimate the uncertainty in the momentum of an electron whose location is uncertain by a distance of 2 Angstrom. What is the uncertainty in the momentum of a proton under the same conditions?

Estimate the value of equity in the firm : Now assume that Gemco Jewelers has $10 million in cash and nonoperating assets and that the firm has $15 million in outstanding debt. Estimate the value of equity in the firm.

What is the maximum induced emf : The loop rotates in the external magnetic field of strength .35 T at a constant frequency of 59.7 Hz.

Total value of the operating assets of the firm : After year five, the firm's capital expenditures will decline to 125 percent of revenues, and the growth rate will drop to 5 percent (in both operating income and noncash working capital). In addition, the cost of capital will decline to 10 perce..

Estimate the value of the firm : Assuming that there is no working capital requirement, and a constant growth rate of 4 percent in perpetuity, estimate the value of the firm.

How long after you see the lightning do you hear the thunder : During a thunderstorm, we first see the lightning and then hear the thunder. Assume that clouds and storm occur in the lower reaches of the earth's atmosphere, which is approximately 5km above the earth's surface. How long after you see the lightn..

User Account

All Pages