5) If a company has $40,000,000 in net income and $500,000,000 in stockholders equity in 2018,...

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5) If a company has $40,000,000 in net income and $500,000,000 in stockholders equity in 2018, and the S&P 500 returned 7%. W

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Answer 1

Answer #1

Net Income = $40,000,000

Capitalization rate = 7%

Theoretical Worth of Company = Net Income / Capitalization rate

= $40,000,000 / 0.07

= $571,428,571.43

So, Company theoretically worth is $571,428,571.43

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Answer 2

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