Question 1: Assume that the U.S. monetary value of a dollar is 100% (e.g., $1.00=$1.00), in 1956. The Eisenhower Company is worth is $5,000,000.00. Compare the monetary value of the dollar of .75 (e.g., $1.00=$.75), in 2005 to the 1956 monetary value:
a. What is the worth of the Eisenhower Company in 2005?
b. What is the present purchasing power of the Eisenhower Co., in 1956, in 2005?
c. What is the earnings per share (EPS), dividends per share (DPS), and book value per share for the Eisenhower Co., with 5,000 shares outstanding?
Table: Earnings per share 1956 = $5.00 2005 = 7.00
Price per share 50.00
Dividends per share 2.00 3.00
Book Value per share 5,000
Market/book ratio 120%
Total Assets $2,000,000
Total debt $1,000,000
Sales $1,500,000
Question 2. Based on the value of the dollar in question one and the following salary structure for the Eisenhower Corporation calculate, analyze, and fully discuss the following assumptions:
1956 2005 Real Value
a. Salary (Annual) $60,000 $60,000 ?
b. Disposable Income: $3,000 $3,750 ?
c. Savings (1956=.20 & 2005=2%) ? ? ?
d. Standard of Living ? ? ?
e. What amount of increase in Salary is necessary in 2005 to equal the Salary in 1956 – fully explain?