Ahern Cosmetics in Problem holds significant promise for carving a niche in its industry. A group of Swedish investors is considering purchasing the company€™s outstanding common stock. Ahern€™s stock is currently selling for $19 per share.

A Dollars and Sense story predicted the company€™s income is bound to grow. It appears that Ahern can earn at least its current level of income for the indefinite future. Based on this information, the investors think that an appropriate investment capitalization rate for estimating the value of Ahern€™s common stock is 10%. How much will this belief lead the investors to offer for Ahern Cosmetics? Will Ahern€™s existing stockholders be likely to accept this offer? Explain youranswers.

n common stock.$23,000 .25,000 9,000 15,000 Prior-period adjustment- debit to Retained Earnings 3,000 I 24,450 7,190 Interest expense Gain on lawsuit settlement... Dividend revenue Treasury stock, common Income tax expense (saving): Continuing operations2 Income from discontinued (4,000 shares at cot.12,000 80,000 Loss on sale of plant asse.13,000 Sales revenue.60,000 oss General expenses Sales revenue....) 560.0 Income from discontinued Retained earnings, beginning, operations18,000 as originally reported.... 193,000 Preferred stock, 10%, $15 par, 500 shares issued 7,500 Extraordinary loss32,000 314,000 Common stock, no par, 27,000 shares authorized and issued.380 Cost of goods sold..