The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering. Introduction: Earnings per share (EPS): It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â P/E ratio: It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 1

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Walker Machine Tools has 7 million shares of common stock outstanding. The current market price of Walker common stock is $82 per share rights-on. The company's net income this year is $25.00 million. A rights offering has been announced in which 700,000 new shares will be sold at S76.50 per share. The subscription price plus seven rights is needed to buy one of the new shares. a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round Intermedlate calculatlons and round your answers to 2 declmal places.) b. What would the earnings per share be immediately after the rights offering? What would the price- earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round Intermedlate calculatlons and round your answers to 2 decimal places.)

Walker Machine Tools has 6 million shares of common stock outstanding. The current market price of Walker common stock is S62 per share rights-on. The company's net income this year is $20.00 million. A rights offering has been announced in which 600,000 new shares will be sold at $56.50 per share. The subscription price plus nine rights is needed to buy one of the new shares. a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round Intermedlate calculatlons and round your answers to 2 declmal places.) Earnings per share Price-earnings ratio

Walker Machine Tools has 6.3 million shares of common stock outstanding. The current market price of Walker common stock is $68 per share rights-on. The company’s net income this year is $21.50 million. A rights offering has been announced in which 630,000 new shares will be sold at $62.50 per share. The subscription price plus six rights is needed to buy one of the new shares.a. What are the earnings per share and price-earnings ratio before the new shares are sold via the rights offering? (Do not round intermediate calculations and round your answers to 2 decimal places.) earnings per share price-earnings ratio b. What would the earnings per share be immediately after the rights offering? What would the price-earnings ratio be immediately after the rights offering? (Assume there is no change in the market value of the stock, except for the change when the stock begins trading ex-rights.) (Do not round intermediate calculations and round your answers to 2 decimal…

Answer 2

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 3

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 4

Question

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

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Answer 5

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 6

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 7

Chapter 17, Problem 16P

a.

Summary Introduction

To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 8

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 9

b.

Summary Introduction

To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.

Introduction:

Earnings per share (EPS):

It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â

P/E ratio:

It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 17 - Prob. 1DQ Ch. 17 - Prob. 2DQ Ch. 17 - Prob. 3DQ Ch. 17 - Prob. 4DQ Ch. 17 - Prob. 5DQ Ch. 17 - Prob. 6DQ Ch. 17 - Prob. 7DQ Ch. 17 - Prob. 8DQ Ch. 17 - Prob. 9DQ Ch. 17 - Why is the cumulative feature of preferred stock...

Solution Summary: The author calculates the EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.

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