Tim Gillespie Week 7

Tim Gillespie Week 7 - Over the course of a year, the stock...

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Tim Gillespie Business Finance Week 7 Chapter 17 4,500,000 outstanding shares $60.00 current market price per share rights on $18,000,000.00 Net Income 455,000 New Shares Rights Offering $59.55 price per new share $55 plus 10 rights needed to buy one of new shares EPS = Earnings / Shares $4.00 P/E Ratio = 15.00 EPS After Rights = Earnings / (Old Shares + New Shares) EPS = $3.64 Ex-Rights P/E Ratio = $16.36 Immediately before the rights offering, the Earnings Per Share would be $4.00, and the P/E Ratio is $15.00. After the rights offering the EPS goes down to 3.64 because there are 455,000 more shares to consider with the same net income level as before. This also reflects on the new P/E Ratio, this ratio would be $16.36.
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Tim Gillespie Chapter 21 Problem 6 Buys 100 shares for $3000 ($30 per share).
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Unformatted text preview: Over the course of a year, the stock goes up 6 points. A. Investment $30 * 1000 = $3,000.00 Value with Stock up 6 points $36 * 1000 = $3,600.00 Multiplied by 1.10 $3600 * 1.10 = $3,960.00 Divide by $3000 $3960 / $3000 = 132.00% Subtract 100% 132% - 100% = 32.00% B. Investment $30 * 1000 = $3,000.00 Value with Stock up 8 points $38 * 1000 = $3,800.00 Multiplied by 1.10 $8600 * .86 = $3,268.00 Divide by $3000 $3268 / $3000 = 108.93% Subtract 100% 108.93% - 100% = 8.93% The French investor would have a 32% return on his original investment if the stock went up 6 points and there was 10% gain on the dollar. The French investor would have a 8.93% return on his original investment if the stock went up 8 points and there was 14% loss on the value of the dollar...
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Tim Gillespie Week 7 - Over the course of a year, the stock...

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