Marker, Incorporated, 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 $8. Net income is currently $3.2 million The new facility will cost $50 million, and it will increase net income by $530,000. Assume a constant price-earnings ratio. b. 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 of dollars, rounded to the nearest whole number, e.g. 1,234,567.)
Marker, Incorporated, 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 $8. Net income is currently $3.2 million The new facility will cost $50 million, and it will increase net income by $530,000. Assume a constant price-earnings ratio. b. 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 of dollars, rounded to the nearest whole number, e.g. 1,234,567.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Marker, Incorporated, 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 $8. Net income is currently $3.2 million.
The new facility will cost $50 million, and it will increase net income by
$530,000. Assume a constant price-earnings ratio. b. 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 of dollars, rounded to the nearest whole number, e.g.,
1,234,567.)
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