Blue Company has a complex capital structure with $1,000,000 4% convertible bonds (convertible into 10,000 shares) when the tax rate is 20%. Net income is $304,000 and the weighted average common shares outstanding are equal to 80,000. Blue will report the following earnings per share (rounded to 2 decimal places): O Basic $3.80 and Diluted $-0-. O Basic $3.80 and Diluted $3.80. O Basic $3.80 and Diluted $3.20. O Basic $3.80 and Diluted 3.73.

Blue Company has a complex capital structure with $1,000,000 4% convertible bonds (convertible into 10,000 shares) when the tax rate is 20%. Net income is $304,000 and the weighted average common shares outstanding are equal to 80,000. Blue will report the following earnings per share (rounded to 2 decimal places): O Basic $3.80 and Diluted $-0-. O Basic $3.80 and Diluted $3.80. O Basic $3.80 and Diluted $3.20. O Basic $3.80 and Diluted 3.73.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The balance sheet for Quinn Corporation is shown here in market value terms. There are 10,000 shares of stock outstanding. Market Value Balance Sheet $ Cash Equity 44,200 $ 404,200 Fixed assets 360,000 $ $ Total Total 404,200 404,200 The company has declared a dividend of $1.90 per share. The stock goes ex dividend tomorrow. Ignoring any tax effects, what is the stock selling for today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock price per share
Chella Vibes Industries capital structure consists solely of debt and common equity. It can issue debt at 11%, and its common stock paid a dividend of $1.50. The stock’s price is currently $22.30, its dividend is expected to grow at a constant rate of 5% per year, its tax rate is 40%, and its WACC is 10.56%. What percentage of the company’s capital structure consists of debt and common equity (ie: what are the weights of debt and common equity)?
Railsplitters, Inc. has the following information for its capital structure: Instrument: Amount Issued Current Price YTM Bond A $500 Million 100.82 4.36% Bond B $350 Million 101.36 4.49% Common Stock 42.5 Million Shares $28.21 per share E(R ) Market = 8.65% β = 1.27 Expected Dividend = $1.95 Rf = 2.10% Growth Rate = 2.75% Given this information, if the tax rate of the firm is 30%, what is the after-tax cost of debt?
Firm LM's debt-to-total-assets ratio (D/TA) is 25 percent, whereas Firm QR's D/TA ratio is 50 percent. LM has $800,000 in assets, $60,000 EBIT, and 15,000 shares of stock outstanding, and it pays 8 percent interest. QR has $400,000 in assets, $70,000 EBIT, and 25,000 shares of stock outstading, and it pays 10 percent interest. The marginal tax rate for both firms is 40 percent. Calculate each firm's EPS and ROE (ROE = Net income/Equity). Discuss your results.
Ashely Corporation has 80 million outstanding equity shares and the following projected financial information for the next four years. The tax rate is 25%. Ashely’s cost of capital is 13%. Assume Ashely is fully financed with equity. Year 1 2 3 4 Earnings Forecast ($millions) 1 Sales 474.28 520.31 571.88 728.99 2 Cost of Goods Sold 269.53 308.19 335.68 490.25 3 Selling, General & Admin. 102.05 108.25 105.24 135.76 4 Depreciation 12.00 15.00 12.50 15.50 5 Net Income 68.03 66.65 88.85 65.61 Capital Requirements ($millions) 6 Capital Expenditures 8.80 11.50 10.60 12.50 7 Increase in Net Working Capital 6.80 7.20 8.25 9.15 Ashely’s CFO wants to use P/E ratio to value the stock’s terminal value in year 4. The CFO forecasts the industry P/E ratio in year 4 is 20. Based on the forecasted P/E ratio, what is the…
Bhupatbhai
Huntington Power Co. has issued following three securities as its long-term source of capital. Calculate the weights of each source of capital (kd, kp, ke). Debt: 2,500 bonds outstanding, current market price of the bond is $1,080. Preferred Stock: 3,000 shares outstanding, selling for $98. Common Stock: 60,000 shares outstanding, selling for $55 per share. a. 42.90%; 4.67%; 52.43% b. 45.63%; 1.72%; 59.67% c. 42.90%; 4.67%; 55.71% d. 59.67%; 5.08%; 35.24% e. 45.63%; 1.72%; 52.65% f. 42.90%; 2.23%; 52.14%
Company X has issued share capital of 1,000,000 x $2 shares; 200,000 x $5 preference shares. There is a loan of $ 200,000 at 5%. There is a revenue reserve of $1,500,000. What is the Gearing ratio of company X Answers: 4,2% 25 % 20% 16,67% The answer is 16, 67% how do you get it?
The book value per share of Topaz General Ltd. is $10 per share and the company has a total of 4 million shares. Calculate the total book value of common equity of the company. a. $10 million b.$40 million OC. $400 million Cd. $4 million. e.$100 million