The balance sheet for Larry Underwood Motors shows a book value of stockholders equity (book value per

Question:

The for Larry Underwood Motors shows a book value of stockholders’ equity (book value per share × total shares outstanding) of $1,300,000. Furthermore, the firm’s income statement for the year just ended has a net income of $500,000, which is $0.25 per share of outstanding. The price-earnings ratio for firms similar to Underwood Motors is 20.
a. What price would you expect Underwood Motors shares to sell for?
b. What is the book value per share for Underwood’s shares?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...