The market value added of Company M. Introduction: The measure to evaluate management’s performance in a company’s operations and growth, market value added considers the market value of the company’s outstanding shares. It reports the market value over and above the book value of those outstanding shares.

Question

1. Over the years, Masterson Corporation’s stockholders have provided $34,000,000 of capital when they purchased new issues of stock and allowed management to retain some of the firm’s earnings. The firm now has 2,000,000 shares of common stock outstanding, and the shares sell at a price of $28 per share. How much value has Masterson’s management added to stockholder wealth over the years, that is, what is Masterson’s MVA? 2. Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm’s EVA? 3. Laiho Industries’s 2017 and 2018 balance sheets (in thousands of dollars) are shown.2018 2017Cash $102,850 $ 89,725Accounts receivable 103,365 85,527Inventories 38,444 34,982Total current assets $244,659 $210,234Net fixed assets 67,165 42,436Total assets $311,824 $252,670Accounts payable $ 30,761 $ 23,109Accruals 30,477 22,656Notes payable 16,717…

Answer 1

Question

Chapter 3, Problem 6P

Summary Introduction

To compute: The market value added of Company M.

Introduction:

The measure to evaluate management’s performance in a company’s operations and growth, market value added considers the market value of the company’s outstanding shares. It reports the market value over and above the book value of those outstanding shares.

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1. Over the years, Masterson Corporation’s stockholders have provided $34,000,000 of capital when they purchased new issues of stock and allowed management to retain some of the firm’s earnings. The firm now has 2,000,000 shares of common stock outstanding, and the shares sell at a price of $28 per share. How much value has Masterson’s management added to stockholder wealth over the years, that is, what is Masterson’s MVA? 2. Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm’s EVA? 3. Laiho Industries’s 2017 and 2018 balance sheets (in thousands of dollars) are shown.2018 2017Cash $102,850 $ 89,725Accounts receivable 103,365 85,527Inventories 38,444 34,982Total current assets $244,659 $210,234Net fixed assets 67,165 42,436Total assets $311,824 $252,670Accounts payable $ 30,761 $ 23,109Accruals 30,477 22,656Notes payable 16,717…

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Over the years, Masterson Corporation’s stockholders have provided $34,000,000 ofcapital when they purchased new issues of stock and allowed management to retain someof the firm’s earnings. The firm now has 2,000,000 shares of common stock outstanding,and the shares sell at a price of $28 per share. How much value has Masterson’s managementadded to stockholder wealth over the years, that is, what is Masterson’s MVA?