Cheer, Inc., wishes to expand its facilities. The company currently has 10 million shares outstanding and...

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Cheer, Inc., wishes to expand its facilities. The companycurrently has 10 million shares outstanding and no debt. The stocksells for $40 per share, but the book value per share is $51. Netincome for Teardrop is currently $3.9 million. The new facilitywill cost $45 million and will increase net income by $420,000. Thepar value of the stock is $1 per share. Assume a constantprice-earnings ratio.
a-1.
Calculate the new book value per share. Assume the stock priceis constant. (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)
a-2. Calculate the new total earnings. (Do not roundintermediate calculations and enter your answer in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)
a-3. Calculate the new EPS. Include the incremental net income inyour calculations. (Do not round intermediate calculationsand round your answer to 4 decimal places, e.g.,32.1616.)
a-4. Calculate the new stock price. Include the incremental netincome in your calculations. (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)
a-5. Calculate the new market-to-book ratio. (Do not roundintermediate calculations and round your answer to 3 decimalplaces, e.g., 32.161.)
b. What would the new net income for the company have to be forthe stock price to remain unchanged? (Do not roundintermediate calculations and enter your answers in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)

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Cheer, Inc., wishes to expand its facilities. The companycurrently has 10 million shares outstanding and no debt. The stocksells for $40 per share, but the book value per share is $51. Netincome for Teardrop is currently $3.9 million. The new facilitywill cost $45 million and will increase net income by $420,000. Thepar value of the stock is $1 per share. Assume a constantprice-earnings ratio.a-1.Calculate the new book value per share. Assume the stock priceis constant. (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)a-2.Calculate the new total earnings. (Do not roundintermediate calculations and enter your answer in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)a-3.Calculate the new EPS. Include the incremental net income inyour calculations. (Do not round intermediate calculationsand round your answer to 4 decimal places, e.g.,32.1616.)a-4.Calculate the new stock price. Include the incremental netincome in your calculations. (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)a-5.Calculate the new market-to-book ratio. (Do not roundintermediate calculations and round your answer to 3 decimalplaces, e.g., 32.161.)b.What would the new net income for the company have to be forthe stock price to remain unchanged? (Do not roundintermediate calculations and enter your answers in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)

a-1.	Calculate the new book value per share. Assume the stock priceis constant. (Do not round intermediate calculations andround your answer to 2 decimal places, e.g., 32.16.)
a-2.	Calculate the new total earnings. (Do not roundintermediate calculations and enter your answer in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)
a-3.	Calculate the new EPS. Include the incremental net income inyour calculations. (Do not round intermediate calculationsand round your answer to 4 decimal places, e.g.,32.1616.)
a-4.	Calculate the new stock price. Include the incremental netincome in your calculations. (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g.,32.16.)
a-5.	Calculate the new market-to-book ratio. (Do not roundintermediate calculations and round your answer to 3 decimalplaces, e.g., 32.161.)
b.	What would the new net income for the company have to be forthe stock price to remain unchanged? (Do not roundintermediate calculations and enter your answers in dollars, notmillions of dollars, rounded to the nearest whole number, e.g.,1,234,567.)