Stencil, Inc., wishes to expand its facilities. The company currently has 12 million shares outstanding and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Stencil, Inc., wishes to expand its facilities. The company currently has 12 million shares outstanding and no debt. The stock sells for $43 per share, but the book value per share is $10. Net income is currently $5 million. The new facility will cost $60 million, and it will increase net income by $560,000. Assume a constant price-earnings ratio. a-1. Calculate the new book value per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-2. Calculate the new total earnings. (Do not round intermediate calculations.) Calculate the new EPS. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) a-3. Calculate the new stock price. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-5. Calculate the new market-to-book ratio. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) What would the new net income for the company have to be for the stock price to remain unchanged? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) a-4. b. Stencil, Inc., wishes to expand its facilities. The company currently has 12 million shares outstanding and no debt. The stock sells for $43 per share, but the book value per share is $10. Net income is currently $5 million. The new facility will cost $60 million, and it will increase net income by $560,000. Assume a constant price-earnings ratio. a-1. Calculate the new book value per share. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-2. Calculate the new total earnings. (Do not round intermediate calculations.) Calculate the new EPS. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) a-3. Calculate the new stock price. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a-5. Calculate the new market-to-book ratio. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) What would the new net income for the company have to be for the stock price to remain unchanged? (Do not round intermediate calculations and enter your answer in dollars, not millions, rounded to the nearest whole number, e.g., 1,234,567.) a-4. b.
Expert Answer:
Answer rating: 100% (QA)
Solution a1 New book value per share Total assets Total liabilities Total share... View the full answer
Related Book For
Corporate Finance
ISBN: 978-1259918940
12th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
Posted Date:
Students also viewed these finance questions
-
Eaton, Inc., wishes to expand its facilities. The company currently has 6 million shares outstanding and no debt. The stock sells for $30 per share, but the book value per share is $8. Net income is...
-
Stencil, Inc., wishes to expand its facilities. The company currently has 5 million shares outstanding and no debt. The stock sells for $40 per share, but the book value per share is $7. Net income...
-
9. What is the coordination entity formed when excess of aqueous KCN is added to an aqueous solution of copper sulphate? Why is it that no precipitate of copper sulphide is obtained when H2S(g) is...
-
The Inter Pipeline Fund is a major petroleum, natural gas liquids extraction, and bulk liquid storage business operating in Western Canada and Europe. The balance sheet and notes to its financial...
-
How do the adaptations of gymnosperms and angiosperms enable them to live in drier habitats than bryophytes and seedless vascular plants?
-
Determine the displacement at point \(C\) of the W14 \(\times 26\) beam made from A992 steel. 8 kip A -5 ft 5 ft. B C -5 ft 5 ft- 8 kip D
-
Jaggar Company sold $3,000,000, 8%, 10-year bonds on July 1, 2014. The bonds were dated July 1, 2014 and pay interest July 1 and January 1. Jaggar Company uses the straight-line method to amortize...
-
The following data, expressed as $10 4 , are the closed ledger accounts showing assets, liabilities, income, and expenses of Blue River Fabricators, Inc., a family owned firm that does not declare...
-
VF Corporation is an apparel company that owns recognizable brands like Timberland, Vans, Reef, and 7 For All Mankind. Exhibit 5.18 and 5.19 present balance sheets and income statements,...
-
Design (the block diagram of) an Armstrong indirect FM modulator to generate an FM carrier with a carrier frequency of 96 MHz and deviation of ?f=20 KHz. A narrowband FM generator with Fc=200 KHz and...
-
1. Consider an infinite cylindrical surface S of unit radius whose axis is the z-axis, placed in air. a) State Gauss' law of electrostatics. Suppose that S has a uniform unit surface charge density...
-
Angelo wants to make an investment today so that he can have $2,700 in a year to buy some new kitchen appliances. How much should he set aside now if he can invest the money at 1.6% annually,...
-
What is the value of $250 at 6% interest rate in one year?
-
QUESTION: 1. Can Costco gain a competitive advantage by diversifying its business and entering the health and insurance industry? 2. If so, does the health and insurance industry align with Costco's...
-
An apparent discrepancy between the investment in IT and macro-measures of productivity was observed late in 20th Century in what became known as the Productivity Paradox (Pinsonneault & Rivard,...
-
1. The SA Water desalination plant in Lonsdale was officially opened in 2013 to assist with fresh water supply during the 2000s drought. As we are no longer drought- stricken in South Australia, the...
-
Write an SQL statement to display all data on products having a QuantityOnHand greater than 0.
-
The price of Ervin Corp. stock will be either $63 or $77 at the end of the year. Call options are available with one year to expiration. T-bills currently yield 4 percent. a. Suppose the current...
-
You have recently won the super jackpot in the Washington State Lottery. After reading the fine print, you discover that you have the following two options: a. You will receive 31 annual payments of...
-
Dog Up! Franks is looking at a new sausage system with an installed cost of $375,000. This cost will be depreciated straight-line to zero over the projects 5-year life, at the end of which the...
-
Derive the frequency equation for the longitudinal vibration of the systems shown in Fig. 8.28. M p. A, E.1 p.A. E,I M k p. A. E,I ell M k (a) (b) FIGURE 8.28 Bar with different end conditions. (c)
-
Fill in the Blank. The ____________ energy of a beam is denoted by \(\frac{1}{2} \int_{0}^{l} E I\left(\frac{\partial^{2} w}{\partial x^{2}} ight)^{2} d x\).
-
a. Longitudinal vibration of a bar b. Torsional vibration of a shaft c. Transverse vibration of a string \(c=\left(\frac{G}{ho} ight)^{1 / 2}\) Data:- \(c^{2} \frac{\partial^{2} w}{\partial...
Study smarter with the SolutionInn App