You are trying to value equity per share in Simran Holdings, a steel company with a 20% holding in Selvan Stores (accounted foras a minority holding) and a 60% holding of Hamron Toys (fully consolidated). You are given the following valuations for operatingassets and net debt in each company.Simran (Consolidated)Selvan StoresHamron ToysA. $22B. $25If Simran has 200 million shares outstanding, estimate the value per share.C. $30D. $38Value of Operating Assets$10,000.00$5,000.00$ 6,000.00E. $72Net Debt$5,000.00$-$ 2,000.00

The term "value per share" refers to the value or price of a single share of a company's stock. It…

Answered: You are trying to value equity per…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $32.5 million. NoEquity, Inc., finances its $65 million in assets with $64 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $65 million in assets with no debt and $65 million in equity. Both firms pay a tax rate of 30 percent on their taxable income. Calculate the net income and return on assets for the two firms. Return on assets = net income / total assets Accounting equation: total assets = total liabilities debt + total equity
NFG investment company that has 4 million shares outstanding has total assets of $62 million and total liabilities of $12 million. If this investment company charges a load of 3.5%, how much would an investor have to pay to purchase one share? . (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
I thought I had D correct but it is showing as wrong. Please help me with D. Hewlard Pocket’s market value balance sheet is given. Assets Liabilities and Shareholders’ Equity A. Original balance sheet Cash $ 150,000 Debt $ 0 Other assets 950,000 Equity 1,100,000 Value of firm $ 1,100,000 Value of firm $ 1,100,000 Shares outstanding = 100,000 Price per share = $1,100,000 / 100,000 = $11 Pocket needs to hold on to $52,000 of cash for a future investment. Nevertheless, it decides to pay a cash dividend of $2.10 per share and to replace cash as needed with a new issue of shares. After the dividend is paid and the new stock is issued: a. What will be the price per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will be the total value of the company? (Enter your answers in whole dollars, not in millions.) c. What will be the total…
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Suppose Beta Industries and Delta Technology have identical assets that generate identical cash flows. Beta Industries is an all-equity firm, with 7 million shares outstanding that trade for a price of $16.00 per share. Delta Technology has 22 million shares outstanding, as well as debt of $33.60 million. a. According to MM Proposition I, what is the stock price for Delta Technology? b. Suppose Delta Technology stock currently trades for $8.27 per share. What arbitrage opportunity is available? What assumptions are necessary to exploit this opportunity? a. According to MM Proposition I, what is the stock price for Delta Technology? According to MM Proposition I, the stock price per share for Delta Technology is $ (Round to the nearest cent.)
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Manufacturer ABC has earnings per share of $3.30 and EBITDA of $40.7 million. The company also has 6.4 million shares outstanding. You believe that XYZ Corporation is comparable to ABC in terms of its underlying business, and it has a P/E of 14.3. Estimate the value of ABC’s shares using P/E as a valuation multiple (to the closest integer)
Binomial Tree Farm's financing includes $5 million of bank loans. Its common equity is shown in Binomial's Annual Report at $6.67 million. It has 500,000 shares of common stock outstanding, which trade on the Wichita Stock Exchange at $18 per share. What debt ratio should Binomial use to calculate its company cost of capital or asset beta? Note: Enter your answer as a percent rounded to 2 decimal places. Debt ratio %
You are considering a stock investment in one of two firms (AllDebt, Inc., and AllEquity, Inc.), both of which operate in the same industry and have identical EBITDA of $15.2 million and operating income of $10.0 million. AllDebt, Inc., finances its $40 million in assets with $39 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. AllEquity, Inc., finances its $40 million in assets with no debt and $40 million in equity. Both firms pay a tax rate of 21 percent on their taxable income. Calculate the income available to pay the asset—funders’ investment—(the debt holders and stockholders) and resulting return on assets for the two firms. (Enter your dollar answers in millions of dollars. Round all answers to 3 decimal places.) AllDebt. AllEquity Income available for asset funders. million. million Return on asset-funders' investment. %. %
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