1. The post merger P/E of Turnbull Corporation is predicted to be 15. The EPS for the previous four quarters totals $2.00 per share for Turnbull. The number of shares outstanding is 100,000. The earnings valuation of Turnbull is
a. $1 million
b. $3 million
c. $5 million
d. none of the above
2. Hawthorne Corporation has a valuation of $1 million. The price per share is $10. The shares outstanding are
a. 100
b. 1000
c. 100,000
d. none of the above
3. Lawson Corporation has 200,000 shares outstanding. The price per share is $20 The market valuation of Lawson is
a. $2 million
b. $3 million
c. $4 million
d. none of the above
4. Commonwealth Corporation is planning an equity issue to finance a new project. Commonwealth plans to issue 100,000 shares of stock. Projected after-tax earnings after completion of project are $2million and shares outstanding will total 200,000. What is the projected EPS after completion of the project?
a. $6
b .$8
c. $10
d. none of the above
5. Dusty Company is planning an equity issue to finance a new project. Dusty plans to issue 100,000 shares of stock. Projected EPS after completion of the project is $10 and total shares outstanding will be 200,000. What are the projected after-tax earnings after completion of the project?
a. $1 million
b. $2 million
c. $3 million
6. Which of the following leans away from the selection of debt for financing?
a. control
b. income
c. flexibility
d. none of the above