Edmund Enterprises: Effects of Investment on EPS, Stock price, and Intrinsic value
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Edmund Enterprises recently made a large investment to upgrade its technology. While these improvements won't have much of an effect on performance in the short run, they are expected to reduce future costs significantly. What effect will this investment have on Edmund Enterprises' earnings per share this year? What effect might this investment have on the company's intrinsic value and stock price?
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Solution Summary
The solution explains how to determine the effects of investment on EPS, stock price, and intrinsic value. This solution is concise (154 words) but descriptive.
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The earnings per share would reduce and the intrinsic value and stock price will increase.
Earnings per share = Net Income/Number of shares. ...
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