Over the years, Jangles Corporation’s shareholders have provided$15,250 of capital, part when they purchased new...

Over the years, Jangles Corporation’s shareholders have provided $15,250 of capital, part when they purchased new issues of stock and part when they allowed management to retain some of the firm’s earnings. The firm now has 1,000 shares of common share outstanding, and it sells at a price of $42.00 per share. How much value has Janjigian’s management added to stockholder wealth over the years, i.e., what is Janjigian’s MVA?

Expert Solution

Over the years, the capital of Jangles Corporation was $ 15,250

Now, the firm has 1000 shares with the market price of $ 42 per share.

This means that the present market value of the firm is $ 42000 ( 1000 x $42 )

Capital over the years was $ 15,250.

Thus the value added to the shareholders wealth by the management is $ 42,000 minus $ 15,250 = $ 26,750

If this Market Value Added has to be expressed in terms of per share, the MVA is $26.75 per share

In percentage, the MVA is 175% [ (26750/15250) x 100 ]

Answer by Javid Husain H (Chegg)

jeff jeffy answered 2 years ago

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Over the years, Jangles Corporation’s shareholders have provided$15,250 of capital, part when they purchased new...

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