Replies to post #406970 on Fannie Mae (FNMA)

[capitalismforever]

Line 2 is where the implicit assumption of 12$ per share is.

Line two doesn't equate to step #2. It just so happens to be the way I wrote it for simplicity sake in explanation. In any event, even if it were, it doesn't equate to circular reasoning.

[capitalismforever]

(Net Earnings)*(Price per earnings ratio)*(1/(# Shares Outstanding + # Shares From Warrant Exercised + # Shares From Recapitalization)) = Price Per Share

That formula doesn't produce the correct answer. The correct way to calculate your formula is:

((NI * PE) - (PFD's)) * ((1) / (shares out. + warrant shares + recap shares)) = PPS