What would the new net income for the company

Assignment Help Finance Basics

Reference no: EM13280896

Teardrop, Inc., wishes to expand its facilities. The company currently has 5 million shares outstanding and no debt. The stock sells for $31 per share, but the book value per share is $7. Net income is currently $3.2 million. The new facility will cost $45 million, and it will increase net income by $900,000.

A. Assuming a contant price-earnings ratio, what will the effect bo on issuing new equity to finance the investment? To answer, calculate the new book value share, the new total earnings, the new EPS, the new stock price, and the new market-to-book ratio. What is going on here?

B. What would the new net income for the company have to be for the stock price to remain unchanged?

Reference no: EM13280896

Questions Cloud

What is probability that there will be more than 100 calls : The arrival rate of calls at a mobile switiching station is 1 per second. The probability of k calls in a T second interval is giving by poisson PMF with h=arivial rate x T. What is the probability that there will be more than 100 calls placed in ..

Compute how much work was done on the aircraft : An aircraft weighing 803 N is accelerated at 10 m/s2 for 9 seconds, at which time the aircraft launches. How much work was done on the aircraft

Evaluate the impact of global financial markets on u.s : Imagine one large global financial market. Describe how it would function and the affect it would have on the global economy.

Find an expression for elcetric field and direction of field : A long thin wire with a linear charge density wavelenght/2 runs through the center of the cylinder. Find an expression for the elcetric field and the direction of the field at each of the following location a)r >R

What would the new net income for the company : Assuming a contant price-earnings ratio, what will the effect bo on issuing new equity to finance the investment? To answer, calculate the new book value share, the new total earnings, the new EPS, the new stock price, and the new market-to-book r..

Determine the electric field strength between the plates : The electron gun in an old TV picture tube accelerates electrons between two parallel plates 1.2cm apart with a 28kV potential difference between them. What is the electric field strength between the plates

What is the expected return on a portfolio : A stock has a beta of 1.25 and an expected return of 14 percent. A risk-free asset currently earns 2.1 percent.

Find the minimized sum of products for the function f : Find the minimized SUM OF PRODUCTS for the following f = ( x1 AND (not x2) AND (not x3) ) + ( x1 AND x2 AND x4 ) + ( x1 AND (not x2) AND x3 AND (not x4) )

Difference between rule and act nonconsequentialist theories : Describe the difference between Rule and Act Nonconsequentialist theories of ethics. Provide examples of each and the role they play in society today.

User Account

All Pages