Barnhart Co. has the following capital structure: Bonds (11%) $95 mil Common Stock($.75 par) $15 mil...
Barnhart Co. has the following capital structure:
Bonds (11%) $95 mil
Common Stock($.75 par) $15 mil
Paid in Capital $250 mil
Retained Earnings $535 mil
If the firm has only had one stock issue, what was the stock price when it was issued?
|
$13.25 |
||
|
$20 |
||
|
$40 |
||
|
$44.75 |
Homework Answers
- Total amount received during only Stock Issue = Common Stock Value + paid in Capital
=$15 million + $250 million
= $265 million
As there is only one stock issue by the firm, the Stock price can be computed by dividending Amount received by no of shares.
No of Common Stock Outstanding = Common Stock Value/Parvalue of Common Stock
=$15 million/$0.75 per share
= 20 million shares
Stock Price when it was issued = Total amount received during only Stock Issue/No of Common Stock Outstanding
=$265 million/20 million shares
= $13.25 per shares
Hence, option A
Add Answer to:
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