The Book Value of the Common Stock of Zircon Global

question 54

Multiple Choice

The book value of the common stock of Zircon Global Ltd. is $34 million. If Zircon has four million shares of common stock outstanding, what is its book value per share?

• A)$136.00 per share
• B)$8.50 per share
• C)$4.00 per share
• D)$0.60 per share
• E)$30.00 per share

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Definitions:

Cash Flows

The total amount of money being transferred in and out of a business, especially affecting liquidity.

IRR

The Internal Rate of Return; a financial metric used to estimate the profitability of potential investments.

Equivalent Annual Annuity

A financial term referring to the annual cash flow from an investment over its lifespan, adjusted to reflect equal annual payments.

Cost of Capital

The target earnings rate that a company seeks on investments to preserve its value in the market and gather funds.