Daughtry Cosmetics in Problem holds significant promise for carving a niche in its industry. A group of Irish investors is considering purchasing the company€™s outstanding common stock. Daughtry€™s stock is currently selling for $43 per share.

A BetterLife Magazine story predicted the company€™s income is bound to grow. It appears that Daughtry 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 Daughtry€™s common stock is 5%. How much will this belief lead the investors to offer for Daughtry Cosmetics? Will Daughtry€™s existing stockholders be likely to accept this offer? Explain youranswers.

$24,000 30,000 .14,000 20,000 Prior-period adjustment- Dividends on common stock... Interest expense Gain on la wsuit settlement Dividend revenue Treasury stock, common debit to Retained Earnings 1,000 Income tax expense (saving) Continuing operations Income from discontinued 33,980 8,680 (12,280) 15,000 (3,000 shares at cost).. 17,000 85,000 610,000 Extraordinary loss Loss on sale of plant assets Income from discontinued General expenses Sales revenue Retained earnings, beginning, 21,000 as originally reported Preferred stock, 4%, $20 par, 3,000 shares issued Selling expenses Common stock, no par, 105,000 60,000 29,400 324,000 25,000 shares authorized and issued Cost of goods sold. 400,000