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You are trying to determine if there has been any creation of value for Apple...

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Finance

  1. You are trying to determine if there has been any creation of value for Apple Company.

    The company had a book value of $375.

    There is a constant discount rate of 8.75%.

    There is a one time net amount of cash returned to shareholders of $895.

    The time period is 8 years.

    Calculate the present value discount factor as 1/(1 + 8.75%)^8.

    What is the market value of the stock and the resulting market/book ratio?

    a.

    Market Value = $457.50; Market/Book Ratio = 1.22
    b.

    Market Value = $457.50; Market/Book Ratio = 1.55
    c.

    Market Value = $475.50; Market/Book Ratio = 2.12
    d.

    Market Value = $754.50; Market/Book Ratio = 1.22

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