Question

In 2025, Sandhill Corporation reported a discontinued operations loss of $812000, net of tax. It declared and paid preferred stock dividends of $81200 and common stock dividends of $321600. During 2025, Sandhill had a weighted-average of 400000 common shares outstanding. As a result of the discontinued operations loss, net of tax, the earnings per share would decrease by

Answer 1

The Sandhill Corporation's earnings per share would decrease by $2.03 due to a loss from discontinued operations. When investing in shares, one calculates the price per share by dividing the present dividend value of expected total profits by the number of shares, which for Babble, Inc. amounts to approximately $256,500 per share.

Step-by-step explanation:

The question regarding Sandhill Corporation involves calculating the decrease in earnings per share (EPS) as a result of a discontinued operations loss. To find this, we divide the discontinued operations loss, net of tax, by the weighted-average number of common shares outstanding. The calculation would be $812,000 (loss) divided by 400,000 (shares), resulting in a decrease of $2.03 per share (EPS Decrease = Loss / Shares).

Comparatively, in the hypothetical scenario presented about Babble, Inc., we would find the price an investor would pay for a share of stock by calculating the present dividend value (PDV) of the total expected profits and dividing it by the number of shares. If Babble, Inc. expects to make profits of $15 million now, $20 million a year from now, and $25 million two years from now, the PDV would sum up to $51.3 million. Dividing this by the 200 shares available, the price per share would be roughly $256,500.