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Rus_ich [418]
2 years ago
13

Baby Fresh Diaper Service has 30,000 shares of stock outstanding at a market price of $37.50 each and earnings per share of $1.2

2. The firm has decided to repurchase $187,500 worth of stock. What will the PE ratio be after the repurchase, all else held constant?
Multiple Choice

25.61


25.30


24.11


26.16


27.85
Business
1 answer:
Bond [772]2 years ago
8 0

Answer:

The first option is correct

Explanation:

The number of stock repurchased need to first of all be determined.

The number of shares repurchased is the cash paid for repurchase of shares divided market price of $37.50

Number of shares repurchased=$187,500/$37.50=5,000 shares

number of shares outstanding after repurchase=30,000-5,000=25,000 shares

revised earnings per share=previous earnings per share*previous shares outstanding/the shares outstanding after repurchase

revised earnings per share=$1.22*30,000/25000=$1.464

P/E ratio=market price per share/revised earnings per share=$37.50/$1.464=25.61

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6 0
2 years ago
Which statement is correct? The underwriters pay the spread. Taxes are an indirect underwriting cost. Seasoned equity offerings
Marat540 [252]

Answer:

The correct statement is Option No. 4 which is "straight bonds are more costly to issue than convertible bonds".

Explanation:

Option 4 "straight bonds are more costly to issue than convertible bonds" is true because generally convertible bonds offer low yield , so it is the lowest cost for issuers.

5 0
2 years ago
Read 2 more answers
(6) Erik receives an eight-year annuity-immediate with monthly payments. The first payment is $300 and payments increase by $6 e
Tamiku [17]

Answer:

  • <u>$70,264.03</u>

Explanation:

You need to calculate the value of 8 × 12 = 96 different cash flows.

There is not a formula to calculate that, because the<em> $6 dollar increase</em> does not represent growing with a constant rate.

The monthly payments are:

Month            payment ($)

0 (today)             300

1                           306

2                          312

3                          318

n                          306 + 6 (n-1)

96 (last)               876

Then you must create a spreadsheet with these features:

  • Five columns
  • First column is the month, and starts with month 0 (today)
  • Second column is the initial balance, the first balance is 0
  • Third column is the interest: it is calculated as the monthly interest by the initial balance. The monthly interest is 6%/12 = 0.06/12 = 0.005
  • Fourth column is the amount deposited: for month zero it is $300, and every month you add $6.
  • Fith column is the final balance: it is the sum of the initial balance (second column) + interest (third column) + deposit (fourth colum)
  • 96 rows: 8 years × 12months/year = 96 months.
  • The initial balance of each row is equal to the final balance of the previous row.

Here a sample of the first three rows:

Month  Initial balance  Interest                    Deposit     Final balance

 0                  0                   0                          300          300

 1                 300             300×0.005 = 1.5    306          607.5

 2                607.5          607.5×0.005           312          922.54

When you do it up to the row 96, the final balance is <em>the balance in the acccount at the end of the eight years</em>.

The last row of your spreadsheet will show:

96           69,042.81      345.21                    876         70,264.03

Thus, <em>the balance at the end of eight years will be $70,264.03</em>

7 0
2 years ago
In her spare time, Sharon is the chair for a local nonprofit organization. The project committee is attempting to determine what
maxonik [38]

Answer: (D) Competing

Explanation:

 According to the given question, Sharon is one of the chair-person of a local non-profit organization and usually in her free time she selected the various types of ideas, thoughts and then forced her ideas on the other organizational members.

So, on the basis of the given concept she is using the competing approach to conflict as this type of approach is typically used for making quick decisions for the purpose of resolving various types of problems or issue is an organization. This is also known as the conflicting management style.  

Therefore, Option (D) is correct answer.

3 0
2 years ago
As a teenager, Enrique learned a valuable lesson from his dad, who told him to invest $1,000 at 8 percent interest at age 20 and
mojhsa [17]

Answer: $538,806.50

Explanation:

This question is a compound interest question. If the savings increased at 14% per year then the amount when he is 68 will be;

Future Value = Present Value * ( 1 + Interest Rate ) ^ Years

Years = 68 - 20

= 48

Future Value = 1,000 ( 1 + 14%) ^ 48

= 1,000 * 538.8065

= $538,806.50

5 0
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