Wayne, Inc., wishes to expand its facilities. The company currently has 6 million sharesoutstanding and no debt. The stock sells for $28 per share, but the book value per shareis $8. Net income is currently $4.2 million. The new facility will cost $42 million, and it willincrease net income by $810,000. Assume a constant price-earnings ratio.a-1. Calculate the new book value per share. (Do not round intermediate calculations

Question
Asked May 12, 2019
28 views
Wayne, Inc., wishes to expand its facilities. The company currently has 6 million shares
outstanding and no debt. The stock sells for $28 per share, but the book value per share
is $8. Net income is currently $4.2 million. The new facility will cost $42 million, and it will
increase net income by $810,000. Assume a constant price-earnings ratio.
a-1. Calculate the new book value per share. (Do not round intermediate calculations
help_outline

Image Transcriptionclose

Wayne, Inc., wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $28 per share, but the book value per share is $8. Net income is currently $4.2 million. The new facility will cost $42 million, and it will increase net income by $810,000. Assume a constant price-earnings ratio. a-1. Calculate the new book value per share. (Do not round intermediate calculations

fullscreen
check_circle

Expert Answer

Step 1

Calculation of New Book Value per share:

fullscreen
Step 2

Excel Workings:

...
fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Business

Finance

Capital Budgeting

Related Finance Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: In 2018, Beta Corporation earned gross profits of $720,000. a. Suppose that Beta was financed by a c...

A: Calculation of net profits:Excel spreadsheet: 

question_answer

Q: Belotti Company just paid a dividend of $1.67 per share to its stockholders. Market analysts believe...

A: Calculation of Required Return:

question_answer

Q: Decide whether the following statement makes sense​ (or is clearly​ true) or does not make sense​ (o...

A: The correct answer is “Statement A”.

question_answer

Q: a firm has an a profit margin of 3.8% and an equity multiplier of 1.90. its sales are 166.0 mil usd,...

A: Using Dupont's ROE decomposition formula,ROE = Net income / Equity = Net income / Sales x Sales / To...

question_answer

Q: The credit card with the transactions described in the popup below uses the average daily balance me...

A: Credit CardIt is a card issued to customers for making payment towards goods and services. These car...

question_answer

Q: A portfolio manager is considering adding another security to his portfolio. The correlations of the...

A: The more negatively correlate a stock is with the portfolio, the more diversification it's addition ...

question_answer

Q: Let C be the price of a call option that enables its holder to buy one share of a stock at an exerci...

A: Given that, K is the exercise price, S is stock price at time 0.

question_answer

Q: Walter is investing $5,000in an account paying 6.75 percent annually for three years. What is the in...

A: Principal invested, P = $ 5,000Interest rate, R = 6.75%Time, T = 3 yearsAs a first step, we will fin...

question_answer

Q: Simone's Sweets is an all-equity firm that has 9,100 shares of stock outstanding at a market price o...

A: Calculating the earnings per share (EPS) of levered firm and unlevered firm. We have,Number of stock...