Homework Answers
market to book value ratio=2.4
outstanding shares-3 million shares
book value of equity-$480 million
market to book value ratio=market capitalization/total book value
2.4=market capitalization/$480 million
so,market capitalization=$480 million*2.4
So,market value =$1152 million
market price=$1152 million/3 million shares
=$384 per share
how will this price change if diluted number of shares is 3.3 million
market price=market value/no. of shares
$1152 million/3.3 million
=$349 per share
diluted number of share=3.3 million shares-3 million shares
=.3 million shares
0r 300,000 shares
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