tlantic Northern Inc. just reported a net income of $10,000,000, and its current stock price is $31.25 per share. Atlantic Northern is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 1,800,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,300,000 shares). 1. If Atlantic Northern’s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now? $29.36 per share $31.25 per share $22.02 per share $36.70 per share 2. One year later, Atlantic Northern Inc.’s stock is trading at $38.00, and the company reports its common equity value as $42,865,600. What is Atlantic Nort
tlantic Northern Inc. just reported a net income of $10,000,000, and its current stock price is $31.25 per share. Atlantic Northern is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 1,800,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,300,000 shares). 1. If Atlantic Northern’s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now? $29.36 per share $31.25 per share $22.02 per share $36.70 per share 2. One year later, Atlantic Northern Inc.’s stock is trading at $38.00, and the company reports its common equity value as $42,865,600. What is Atlantic Nort
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
Related questions
Question
Atlantic Northern Inc. just reported a net income of $10,000,000, and its current stock price is $31.25 per share. Atlantic Northern is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 1,800,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,300,000 shares).
1. If Atlantic Northern’s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now?
- $29.36 per share
- $31.25 per share
- $22.02 per share
- $36.70 per share
2. One year later, Atlantic Northern Inc.’s stock is trading at $38.00, and the company reports its common equity value as $42,865,600. What is Atlantic Northern Inc.’s market-to-book (M/B) ratio?
3. Is it possible for a company to have a negative EPS and thus a negative P/E ratio?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education