Explore BrainMass
Share

Computation of Book Value

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Digby's balance sheet has $80,975,000 in equity. Further, the company is expecting net income of 4,000,000 next year, and also expecting to pay $5,000,000 in dividends. If there is no new stock issued what will be Digby's book value?
Select: 1
$79,975,000
$44,189,000
$34,189,000
$89,975,000

© BrainMass Inc. brainmass.com October 25, 2018, 9:39 am ad1c9bdddf
https://brainmass.com/business/finance/computation-of-book-value-581602

Solution Summary

Computation of book value

$2.19
See Also This Related BrainMass Solution

Computing Intrinsic Price-To-Book Ratio

A firm with a book value of $15.60 share and 100 percent dividend payout is expected to have a return on common equity of 15 percent per year indefinitely in the future. Its cost of equity is 10 percent.

a) Calculate the intrinsic price-to-book ratio
b) Suppose this firm announced that it was reducing its payout to 50 percent of earnings in the future. How would this affect your calculation of the price-to-book ratio?

View Full Posting Details