Valuing Investments

The following data come from the 2007 financial statements of Ford Motor Company:1. Estimate the book value of property and equipment disposed of during 2007.2. Assume that a half-year’s depreciation is taken on all assets acquired and disposed of during the year. Estimate the average depreciation life of Ford’s property and equipment. Assume that none of the disposals was land, and eliminate the land balance when estimating the average depreciation life.3.

Estimate the average age of property and equipment (excluding land) owned by Ford as of December 31,2007.

The following data relate to Edger Company:The stock was selling at 120.5%, 108.0%, and 105.0% of book value in 2009, 2008, and 2007, respectively.Requireda. Compute the following for 2009, 2008, and 2007:1. Percentage of earnings retained2. Price/earnings ratio3. Dividend payout4. Dividend yield5. Book value per shareb.

Comment on your results from (a). Include in your discussion the data on backlog and new contracts awarded.

 

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