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Over the years, O'Brien Corporation's stockholders have provided $20,000,000 of capital. The firm now has 1,000,000 shares of common stock outstanding, and it sells at a price of $39.50 per share. What is O'Brien's MVA

Respuesta :

osondumartins

Options:

A. $18,500,000

B. $19,000,000

C. $19,500,000

D. $20,000,000

E. $20,500,000

Answer: C. $19,500,000.

Explanation:MVA(MARKET VALUE ADDED) is a measurement that is used to describe the difference between the market value to a company and the capital contributed by both the shareholders and the bondholders.

WHEN THE MARKET VALUE ADDED IS HIGH IT SIGNIFIES THAT THE COMPANY IS GENERATING ENOUGH MONEY TO COVER THE COST OF CAPITAL.

MVA= (market value-stockholders contribution).

Market value =$39.5*1000000shares

= $39,500,000

MVA= $39,500,000-$20,000000

MVA=$19,500,000.

ripeg1471

Answer:

19,500,000

Explanation:

1. Find Market Value of Equity (MVE).

MVE=stock price * number of  shares =$39.5*1 (mln)=39.5(mln)

2. Thus ,find MVA .

MVA=MVE -Total Capital =39.5(mln)- 20(mln)= 19.5 (mln) or 19,500,000

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