Question

Chester's balance sheet has $106,244,000 in equity. Further, the company is expecting net income of 3,000,000...

Chester's balance sheet has $106,244,000 in equity. Further, the company is expecting net income of 3,000,000 next year, and also expecting to issue $4,000,000 in new stock. If there are no dividends paid what will beChester's book value?

Select: 1

A. $113,244,000
B. $52,540,000
C. $44,540,000
D. $105,244,000

Business   Accounting   
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Homework Answers

Answer #1
Solution:
Answer is A. $113,244,000
Working Notes:
Book value of the company = Equity fund of the company
Book value of the company =Beginning Equity value + Fresh issue of Equity + Net income - Dividend paid if any
Book value of the company =$106,244,000+ 4,000,000+$3,000,000-$0
Book value of the company =$113,244,000
Book value company = Total assets - total debt = Equity
Please feel free to ask if anything about above solution in comment section of the question.
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