Description of Share Price
Not what you're looking for?
Question: Baruk Industries has no cash and a debt obligation of $36 million that is now due. The market value of Baruk's assets is $81 million, and the firm has no other liabilities. Assume perfect capital markets.
a. Suppose Baruk has 10 million shares outstanding. What is Baruk's current share price?
b. How many new shares must Baruk issue to raise the capital needed to pay its debt obligation?
c. After repaying the debt, what will Baruk's share price be?
Purchase this Solution
Solution Summary
In a concise and step-wise response, this solution explains how to calculate the current share price and share price after repaying debt. All calculations are included.
Solution Preview
a. The current share price would reflect the market value of equity. Total value of assets is $81 million and the value of debt is $36 million.
Value of equity = Value ...
Purchase this Solution
Free BrainMass Quizzes
Operations Management
This quiz tests a student's knowledge about Operations Management
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.