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The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per Share * total shares outstanding) of $1,324,000. Furthermore, the firm's income statement for the year just ended has a net income of $554,000, which is $0.261 per share of common stock outstanding. The price- earnings ratio for firms similar to Underwood Motors is 21.01. Required: a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares?

The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per Share * total shares outstanding) of $1,324,000. Furthermore, the firm's income statement for the year just ended has a net income of $554,000, which is $0.261 per share of common stock outstanding. The price- earnings ratio for firms similar to Underwood Motors is 21.01. Required: a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per Share * total shares outstanding) of $1,324,000. Furthermore, the firm's income statement for the year just ended has a net income of $554,000, which is $0.261 per share of common stock outstanding. The price- earnings ratio for firms similar to Underwood Motors is 21.01. Required: a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares?
Transcribed Image Text:The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per Share * total shares outstanding) of $1,324,000. Furthermore, the firm's income statement for the year just ended has a net income of $554,000, which is $0.261 per share of common stock outstanding. The price- earnings ratio for firms similar to Underwood Motors is 21.01. Required: a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares?
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