Chapter 14 Solutions

Chapter 14 Solutions - a) $89 / $980 = 0.09082 (assuming...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 14 Solutions 1) a. P / E = 20 (E = EPS), P=$15 therefore $15 / E = 20 and $15 / 20 = E = $0.75 b. D / $15 = 0.05 therefore D = $0.75 c. P / B = 1.5 B = $15 / 1.5 = $10 thus $10 x 100,000 = $1,000,000 2) $88 / X = 0.07 = X = $1,257 3) $83 / X = 0.07 = X = $1,186 4) $88 / X = 0.096 = X = $917 5) $83 / X = 0.096 = X = $865 6) 5.4 / (1 - .25) = 7.2 percent taxable 7) 5.7 / (1 - .33) = 8.51 percent taxable 8) 8.7(1-.25) = 6.53 percent tax free 9)
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: a) $89 / $980 = 0.09082 (assuming the purchase price of 980 is also the current price) b) $89 / (0.09082 0.02) = $1,256 c) [{89 + ((1000-980) / 20)} / (1000+980) / 2] = 90 / 990 = 0.09091 10) a) $82 / $1,100 = 0.07455 (assuming the purchase price of 1,100 is also the current price) b) [{82 + ((1000-1100) / 18)} / (1000+1100) / 2] = (82 5.56) / 1050 = 0.0728 c) $82 / (0.07455 + 0.015) = $915.69...
View Full Document

Ask a homework question - tutors are online