Butterfield's Is an All-Equity Firm with 165,000 Shares of Stock

question 69

Multiple Choice

Butterfield's is an all-equity firm with 165,000 shares of stock outstanding.The book value per share is $17 and the market value per share is $63.The current net income is $521,000.The firm is considering a new project that will cost $3.6 million and increase net income by $168,000.The current earnings per share are ____ and they will be ____ if the project is accepted.

• A)$3.21;$3.12
• B)$3.86;$3.24
• C)$3.86;$3.82
• D)$3.21;$3.18
• E)$3.21;$3.24

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Definitions:

Reckless Disregard

Reckless disregard denotes a conscious indifference to the rights or safety of others or a known risk, acting without concern for the likely consequences.

Fraudulent Misrepresentation

A false statement made knowingly, without believing in its truth, or recklessly, with the intention to deceive and induce another party to enter into a contract.

Liable

Liable means being legally responsible for something, typically involving financial compensation or another form of restitution.

Reliance

The act of relying or depending on something, often related to a belief or action based on certain expectations or promises.