1) Bartow Industrial is reviewing a new proposal which will require $360,000 of new fixed assets

1) Bartow Industrial is reviewing a new proposal which will require $360,000 of new fixed assets. The net present value of the project is $84,000. The price-earnings ratio of the project equals that of the existing firm. What will the new book value per share be after the project is implemented given the following current information on the firm? Number of Shares Outstanding 50,000 Book Value $894,000 Market Value $1,072,000 Net Income $67,000 Price Earnings Ratio 16 Earnings Per Share $1.34 A. $16.22 B. $18.77 C. $22.47 D. $23.61 E. $25.08

2)

Ben and Jennie's wants to expand their operations into the cookie business. It needs $20 million to build a bakery and establish a distribution system. Currently, the firm has 1,300,000 shares of stock outstanding. The market price of the stock is $34 a share. Ben and Jennie's decides to raise the needed capital through a rights offering wherein every stockholder will receive one right for every share of stock they own. The subscription price will be $28. How many rights will be needed to purchase one new share of stock in this offering?

A. 1.21 rights
B. 1.27 rights
C. 1.54 rights
D. 1.82 rights
E. 2.21 rights