Over the years, o'brien corporation's stockholders have provided $20,000,000 of capital, when they purchased new issues of stock and allowed management to retain some of the firm's earnings. the firm now has 1,000,000 shares of common stock outstanding, and it sells at a price of $32.00 per share. how much value has o'brien's management added to stockholder wealth over the years, i. e., what is o'brien's mva?

The answer is: O'Brien's MVA is $12,000,000

Explanation:

We first take the total book value of equity $20,000,000

Then e calculate the market value of the company (stock price per share times shares outstanding) = $32 per share x 1,000,000 shares = $32,000,000

The market value added (MVA) is the difference between market value and equity value:

MVA = $32,000,000 - $20,000,000 = $12,000,000

answer; i believe the correct answer is (a) purchase of treasury stock;

hi : ) i found this so i hope this !

"we first find value of tax in dollars.

the difference between the two prices   is: 23. 54 - 22 = 1.54

therefore the sales tax in dollars is 1.54

the tax % will be   (amount of tax / original cost price ) × 100

(1.54 / 22) × 100  → (0.07) × 100 =   7

so the tax rate is 7%

we can double check the answer.

7 % of 22   → (7/100) × 22 → 0.07 × 22 = 1.54

22 + 1.54 = 23.54"