Question

Harper Industries has $800 million of common equity on its balance sheet; its stock price is $20 per share; and its market value added (MVA) is $120 million. How many common shares are currently outstanding? Write out your answer completely. For example, 5 million shares should be entered as 5,000,000. Round your answer to the nearest whole number, if necessary.

Answer 1

Answer:

Common shares outstanding = 40,000,000

Explanation:

We will calculate as follows:

Common shares outstanding = common equity / price per share

Common shares outstanding = 800,000,000/ 20

Common shares outstanding = 40,000,000

The market value added (MVA) is not taken into account because it´s an amount that came from the market and not from the relationship between the company and the owners