Over the years, Masterson Corporation's stockholders have provided $35,000,000 of capital when they purchased new issues of stock and allowed management to retain some of the firm's earnings. The firm now has 2,100,000 shares of common stock outstanding, and the shares sell at a price of $30 per share. How much value has Masterson's management added to stockholder wealth over the years, that is, what is Masterson's MVA? Round your answer to the nearest dollar, if necessary.

Over the years, Masterson Corporation's stockholders have provided $35,000,000 of capital when they purchased new issues of stock and allowed management to retain some of the firm's earnings. The firm now has 2,100,000 shares of common stock outstanding, and the shares sell at a price of $30 per share. How much value has Masterson's management added to stockholder wealth over the years, that is, what is Masterson's MVA? Round your answer to the nearest dollar, if necessary.

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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A firm earns $3550 million in profits and pays $2480 million in dividends for the year. The firm has 175 million shares of preferred stock and 525 million shares of common stock. The preferred stock is guaranteed a dividend of $4.50 per year and costs $52 per share. The common stock costs $39 per share. What is the dividend yield for the common stock? Enter your response as a percent and do not include the percent sign. Round to 1 decimal place.
You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $3200 million in assets with $30.00 million in debt and $200 million in equity. LotsofEquity, Inc. finances its $32.00 million in assets with $2.00 million in debt and $30.00 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Debt ratio LotsofDebt, Inc. LotsofEquity, Inc. Calculate the equity multiplier. (Round your answers to 2 declmal places.) Equity multiplier LotsofDebt, Inc. times LotsofEquity. Inc, times Calculate the debt-to-equity. (Round your answers to 2 decimal places.) Debt-to-equity LotsofDebt, Inc. times LotsofEquity. Inc. times pe here to search W 59°F Mostly cloudy DELL
In previous years, Cox Transport reacquired 3 million treasury shares at $25 per share and, later, 1 million treasury shares at $29 per share. If Cox now sells 2 million treasury shares at $32 per share and determines cost as the weighted-average cost of treasury shares, by what amount will Cox’s paid-in capital - share repurchase increase? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)
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Random Tools is currently an all-equity firm that has 7,200 shares of stock outstanding at a narket price of $41 per share. The firm has decided to leverage its operations by issuing $60,000 of debt at an interest rate of 7.6 percent. This new debt will be used to repurchase shares of the outstanding stock. The restructuring is expected to increase the earnings per share. What is the minimum level of earnings before interest and taxes that the firm is expecting? Ignore taxes.
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The company raises $5 million in equity capital by selling new shares of stock in the company to equity investors. The par value of these shares is $100,000. For each element of the fundamental accounting equation (A, L, E), indicate whether that element increases, decreases, or ultimately remains unchanged.
AAA Corporation and BBB Corporation are identical in every way except their capital structures. AAA Corporation, an all-equity firm, has 45 million shares of stock outstanding, currently worth $50 per share. BBB Corporation uses leverage in its capital structure. The market value of BBB’s debt is $400mil., and its cost of debt is 3.5 percent. Each firm is expected to have earnings before interest and tax of $155mil. in perpetuity. Assume that every investor can borrow at 3.5 percent per year. Corporate tax rate is 35%. Q18. BBB is about to undertake a new project. Initial outlay for the project is $1.5 billion. The project is expected to generate annual after-tax free cash flows of $65 million indefinitely. If the project has similar risk characteristics to those of BBB company as a whole, and if it could be financed with the same financing proportions that the company currently uses, what would be the project’s net present value (NPV)? (with the rounding, choose the answer that is…
Explain well with proper step by step Answer.
HBM, Inc has the following capital structure: Assets $ 600,000 Debt $ 150,000 Preferred stock 90,000 Common stock 360,000 The common stock is currently selling for $16 a share, pays a cash dividend of $0.60 per share, and is growing annually at 4 percent. The preferred stock pays a $7 cash dividend and currently sells for $88 a share. The debt pays interest of 7.0 percent annually, and the firm is in the 30 percent marginal tax bracket. What is the after-tax cost of debt? Round your answer to two decimal places. % What is the cost of preferred stock? Round your answer to two decimal places. % What is the cost of common stock? Assume that the current $0.60 dividend grows by 4 percent during the year. Round your answer to two decimal places. % What is the firm’s weighted-average cost of capital? Round your answer to two decimal places.
Blue TJ’s has a market value equal to its book value. Currently, the firm has excess cash of $389,000, other assets of $911,674, and equity of $886,200. The firm has 60,000 shares of stock outstanding and net income of $984,800. Management has decided to spend 20 percent of the firm’s excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?

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