Cecil Corporation is thinking about constructing a new facility. The company has usually distributed its earnings in the form of dividends. Common stock has typically been issued to finance capital expansion. Preferred stock and debt are not in the capital structure. (see the attached picture for the problem) The company's expectations follow:Net incomePI8,000,000Outstanding sharesConstruction cost of new facility P10,000,0002,000,000The expected additional carnings due to the new facility is P2 million. The expected stock-holder rate of return is 16 percent per annum. What is the total market value of the company,assuming the facility is financed with common stock?

It is given in the question that company usually distribute its earning in the form of dividend it…

Answered: cally been issued to finance capital…

cally been issued to finance capital expansion. Preferred stock and debt are not in the capital structure. (see the attached picture for the problem)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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