2A2W BULL & BEAR INVESTMENT BANKING IS WORKING WITH THE MANAGEMEN...
72.
CSO: 2A2e
LOS: 2A2w
Bull & Bear Investment Banking is working with the management of Clark Inc. in order
to take the company public in an initial public offering. Selected financial information
for Clark is as follows.
Long-term debt (8% interest rate)
$10,000,000
Common equity:
Par value ($1 per share)
3,000,000
Additional paid-in-capital
24,000,000
Retained earnings
6,000,000
Total assets
55,000,000
Net income
3,750,000
Dividend (annual)
1,500,000
If public companies in Clark’s industry are trading at twelve times earnings, what is the
estimated value per share of Clark?
a.
$9.00.
b.
$12.00.
c.
$15.00.
d.
$24.00.