What is the worth of the eisenhower company


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?

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