60.1K

Verified Solution

Link Copied!

(a) What is Happy Habitations' book value per share

(b) What is its liquidation value per share?

(c) What is the value of its common stock based on P/E?

4. The balance sheet for Happy Habitations follows: Happy Habitations Bal ance Sheet December 31, 2014 Assets Cash Marketable Securities Accounts Receivable Inventories Liabilities and Owners Equit Accounts Payable Notes Payable Accrued Wages 50,000 60,000 120,000 160,000 390,000 150,000 250,000 Total Fixed Assets (ne 400,000 790,000 100,000 30,000 40,000 170,000 180,000 80,000 260,000 100,000 790,000 Total Current Labilities Total Current Assets Long Term Debt Preferred Stock Common Stock (100,000 sh ares) Retained Earnings Land and Buildings (net) Machinery and Equipment Total Assets Total Liabilities and Owner's Equity Additional information: 1 Preferred stock can be liquidated at book value 2 Accounts receivable and inventories can be liquidated at 80% of book value 3 The firm has 100,000 shares of common stock outstanding 4 All interest and dividends are currently paid up 5 Land and buildings can be liquidated at 120% of book value 6 Machinery and equipment can be liquidated at 60% of book value 7 Cash and marke table securities can be liquidated at book value 8 Expected EPS is $0.60 pershare 9 Price/earnings multiple of peerfirms is 6.2

Answer & Explanation Solved by verified expert

See Answer