#2. Explain how you would estimate the total worth of a business.
The first approach in evaluating the worth of a business is determining its net worth or
The second approach to measuring the value of a firm grows out of the belief that the worth of
any business should be based largely on the future benefits its owners may derive through net
The third approach is to let the market determine a business’s worth. First, base the firm’s worth
on the selling price of a similar company. Second, calculate a price-earnings ratio. To use this
method, divide the market price of the firm’s common stock by the annual earnings per share
and multiply this number by the firm’s average net income for the past five years. The third
approach can be called the outstanding share method. To use this method, simply multiply the
number of shares outstanding by the market price per share and add a premium.
#5. How would the R&D role in strategy implementation differ in small versus large organizations?
The R&D role in strategy implementation would depend more on the type of industry than the
size of the firm. Some firms do research and development solely as their business.
#15. Complete the following ESP/EBIT analysis for a company whose stock price is $20, interest rate on funds is 5 %, tax rate is 20%, number of shares outstanding is 500 million, and EBIT range is $100 million to $300 million. The firm needs to raise $20 million in capital. Either create a new table or use the information from #23 on page 292 in the d.
Please join StudyMode to read the full document