Kendall Corporation in Problem P11-42B holds significant promise for carving a niche in the electronic controls industry, and a group of Swiss investors is considering purchasing Kendall's outstanding common stock. Kendall's common stock is currently selling for $50 per share.
A Business Today magazine story predicts that Kendall's income is bound to grow. It appears that the company can earn at least its current level of income for the indefinite future.
Based on this information, the investors think an appropriate investment capitalization rate for estimating the value of Kendall common stock is 6%. How much will this belief lead the investors to offer for Kendall Corporation? Will the existing stockholders of Kendall be likely to accept this offer? Explain your answers.
Problem P11-42B
The following information was taken from the records of Kendall Corporation at April 30, 20X3. Kendall manufactures electronic controls for model airplanes.

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s 15,000 Treasury stock, common Dividends Interest revenue Extraordinary gain Income form discontinued operations. 4,000 (1,000 shares at cost. 19,000 Prior-period adjustment $ 11,000 credit to Retained Earnings..6,000 11,000 5,000 12,000 Interest expense General expenses Preferred stock-5%, $40 par, 113,000 Cost of goods sold. Loss on sale of plant assets8,000 10,000 shares authorized, 5,000 shares issued Income tax expense (saving): 200,000 Continuing operations Retained earnings, beginning, as or iginally reported 88,000 136,000 833,000 25,000 shares authorized and issued.. 250,000 Extr aondinary gain 12,000 Selling expenses Sa les revenue Common stock, $10 par,