The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering. Introduction: Earnings per share (EPS): It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â P/E ratio: It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 1

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Walker Machine Tools has 6 million shares of common stock outstanding. The current market price of Walker common stock is S62 per share rights-on. The company's net income this year is $20.00 million. A rights offering has been announced in which 600,000 new shares will be sold at $56.50 per share. The subscription price plus nine rights is needed to buy one of the new shares. a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round Intermedlate calculatlons and round your answers to 2 declmal places.) Earnings per share Price-earnings ratio

Walker Machine Tools has 6.3 million shares of common stock outstanding. The current market price of Walker common stock is $68 per share rights-on. The company’s net income this year is $21.50 million. A rights offering has been announced in which 630,000 new shares will be sold at $62.50 per share. The subscription price plus six rights is needed to buy one of the new shares.a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round intermediate calculations and round your answers to 2 decimal places.) earnings per share price-earnings ratio b. What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round intermediate calculations and round your answers to 2 decimal…

APE company has 6.7 million shares of common stock outstanding. The current market price common stock is $76 per share rights-on. The company's net income this year is $23.50 million. A rights offering has been announced in which 670,000 new shares will be sold at $70.50 per share. The subscription price plus nine rights is needed to buy one of the new shares. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? Earnings per share Price-earnings ratio 2.What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.)

Answer 2

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 3

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 4

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 5

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 6

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 7

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 8

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 9

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 17 - Prob. 1DQ Ch. 17 - Prob. 2DQ Ch. 17 - Prob. 3DQ Ch. 17 - Prob. 4DQ Ch. 17 - Prob. 5DQ Ch. 17 - Prob. 6DQ Ch. 17 - Prob. 7DQ Ch. 17 - Prob. 8DQ Ch. 17 - Prob. 9DQ Ch. 17 - Why is the cumulative feature of preferred stock...

Solution Summary: The author calculates the EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

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Chapter 17 Solutions