a.
To calculate: The number of shares that would be outstanding after a stock split of two-for-one, and its par value.
Introduction:
Stock split:
A corporate procedure through which the management of a company divides its current shares to increase the shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.
b.
To calculate: The number of shares that would be outstanding after a stock split of three-for-one, and its par value.
Introduction:
Stock split:
A corporate procedure through which the management of a company divides its current shares to increase the shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.
c.
To calculate: The EPS of Wilson Pharmaceutical before stock split and after stock splits of 2-for-1 and 3-for-1, if the total earnings are $11 million.
Introduction:
Stock split:
A corporate procedure through which the management of a company divides its current shares to increase the shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.
Earnings per share (EPS):
It is the profit earned by shareholders on each share. 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.
d.
To calculate: The price per share of Wilson Pharmaceutical after a 2-for-1 split and a 3-for-1 split, assuming the P/E ratio to be 36.36.
Introduction:
Stock split:
A corporate procedure through which the management of a company divides its current shares to increase the shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.
P/E ratio:
It is computed by dividing the current share price of a company by its EPS. It helps in valuing the present as well as future profitability of a company.
e.
To explain: Whether there will be a change in the P/E ratio of Wilson Pharmaceuticals because of the stock split.
Introduction:
Stock split:
A corporate procedure through which the management of a company divides its current shares to increase the shares outstanding is termed as stock split. It helps in boosting the liquidity of shares.
P/E ratio:
It is computed by dividing the current share price of a company by its EPS. It helps in valuing the present as well as future profitability of a company.
Want to see the full answer?
Check out a sample textbook solution
Chapter 18 Solutions
Foundations of Financial Management
- Problem 6-35 Financial Break-Even Analysis The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Martin Enterprises needs someone to supply it with 152,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost $1,920,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that, in five years, this equipment can be salvaged for $162,000. Your fixed production costs will be $277,000 per year, and your variable production costs should be $10.60 per carton. You also need an initial investment in net working capital of $142,000. The tax rate is 22 percent and you require a return of 12 percent on your investment.…arrow_forwardYou plan to purchase a $100,000 house using a 30-year mortgage obtained from your local credit union. The mortgage rate offered to you is 8.25 percent. You will make a down payment of 20 percent of the purchase price. Calculate the amount of interest and, separately, principal paid in the 225th payment. Calculate the amount of interest paid over the life of this mortgage.arrow_forwardWhat are the back ground of Sears problem, and what are the general of the problem statements? How to Create problem statements and applicable research questions? What are the lessons learned from Sears that business people or organization should avoid?arrow_forward
- What are the research assumptions, and the research limitations, please give examples for each one, and explain how the limitation in the example might be mitigated? What are the research delimitations and give one example please. Hhow Biblical principles are related to reliability and validity.arrow_forwardWhat are the six sources of data collection and please help to explain the qualitative data collection methods. What is the thematic analysis? How to anticipated themes in a research proposal?arrow_forwardExplain in detail the principle of Compounding of interest and why is it so important in Finance.arrow_forward
- What is the bond quote for a $1,000 face value bond with an 8 percent coupon rate (paid semiannually) and a required return of 7.5 percent if the bond is 6.48574, 8.47148, 10.519, and 14.87875 years from maturity?arrow_forwardGentherm Incorporated has a convertible bond issue outstanding. Each bond, with a face value of $1,000, can be converted into common shares at a rate of 42.25 shares of stock per $1,000 face value bond (the conversion rate), or $19.85 per share. Gentherm’s common stock is trading (on the NYSE) at $19.85 per share and the bonds are trading at $1,025. Calculate the conversion value of each bond. Note: Round your answer to 4 decimal placesarrow_forwardYou are looking to lease a 2019 Subaru Forester. You have found a 36 - month closed end lease on a Forester with an MSRP of $25, 270 and a lease end purchase option of $15,667 (residual value). To get the lease you have to pay a fee of $1,765 due at signing, and the monthly payment was calculated to be $ 265. A) What is the nominal rate of return the dealership is earning on the lease? (Hint: think of the cash flows from the dealerships prospective) B) What would the lease payment be if the dealership wanted a nominal 6% compounded monthly on the lease?arrow_forward
- What should business people learn about the problem started with Sears and organizational consequences?How the traditional retail businesses face significant challenges in remaining competitive in the digital age? What is the broad exploration of retail industry challenges without assuming specific causes or outcomes, making them suitable for research and why?arrow_forwardWhat are Biblical principles researchers can follow to mitigate Unintended errors in research?How a Christian conduct during a research proposal and study can be a witnessof the Gospel to others.arrow_forwardWhat is Sears business problem? What cause Sears to collapse and closeout the company? Would you please help to explain, what is the problem statement, and general problem? Could you help to provide four research questions that align with the problem statement, ensuring they are exploratory, not assumptive, and not specific to an organization.arrow_forward
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Fundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Fundamentals of Financial Management, Concise Edi...FinanceISBN:9781285065137Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Fundamentals of Financial Management, Concise Edi...FinanceISBN:9781305635937Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning