Middletown Corporation Issued 3,000,000 Shares of $1 Par Value Common

Essay

Middletown Corporation issued 3,000,000 shares of $1 par value common stock. In the current year, Middletown reported sales of $33.2 million, an operating profit of $5.4 million, and net income of $4.2 million. During the year, Middletown sold a business segment at a loss.
Required:
A) Show earnings per share as it would appear on the income statement.
B) Assume an investment capitalization rate of 6%. What price should an investor be willing to pay for a share of stock?