JL Enterprises has 90,000 shares of stock outstanding with a book value of $1,343,000 and a market value of $1,560,000. The firm is considering a project that requires the purchase of $189,000 of fixed assets and has a net present value of $7,500. The project would be all-equity financed through the sale of shares. What will the new book value per share be after the project is implemented?

Question

Quizplus · Accepted Answer

The new book value per share is calculated by adding the cost of the project to the current book value and then dividing by the new total number of shares. New book value = ($1,343,000 + $189,000) / (90,000 + $189,000/$17.33) = $15.18.

JL Enterprises Has 90,000 Shares of Stock Outstanding with a Book