Compute the Values of an equity share and of preference share of each of the following companies:(a) When a few shares are sold and (b) When controlling shares are to be sold. Following informationis furnished:Company ACompany B$Profit after tax10,00,00010,00,00012% Preference Capital (Shares of $ 100 each)10,00,00020,00,000Equity Capital ( Shares of $ 10 each )50,00,00040,00,000Assume that market expectation is 15% and 80% of profits are distributed.

The question is related to Valuation of Shares. The details of two companies A and B are given.

Answered: Compute the Values of an equity share…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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on the preference shares. The net income for the current 1. What amount should be reported as basic earnings per issued 500,000 preference shares which were convertible into 2,000,000 ordinary shares outstanding. On July 1, the entity Problem 20-14 (IAA) During the year, the entity declared and paid P1,000,000 cash dividend on the ordinary shares and P800,000 cash dividend A the beginning of current year, Frown Company had S000,000 ordinary shares outstanding. On July 1, the entity 300,000 ordinary shares. Year was P6,500,000. share? a. 2.85 b. 3.25 С. 2.35 d. 2.25 per share? а. 2.85 b. 3.02 с. 2.83 d. 1.75 633
a company has the following items: share capital-ordinaty: $920,000 treasury shares : $85,000 deferred taxes $100,000 retained earning : $ 363,000 which ammount should be report as total equity ? A- 1098000 B- 1198000 C- 1298000 D- 1398000
Consider firm X and Y.The firm had total earrings of $400,000 and shares outstanding of $95,000. Firm X per share market value is 4.5, Firm X per share book value is$4.5. Firm Y per share had total earnings of $300,000 and shares outstanding of $192,500. FirmY per share market value is $24.5 Firm Y per share book value is $312.875. a. Assume that firm X acquires FirmY by issuing long term debt to purchase all the shares outstanding at a merger premium of$6.875. Assuming that neither firms has any debt before merger, what would be the total assets for the new company XY? b.Assume that Firm Y acquires Firm X by issuing long term debt to purchase all the shares outstanding at a merger premium of $2.375. Assuming that neither firm has any debt before the merger, what would be the total assets for the new company YX round your answer to four decimal places after the point
The shareholders’ equity of Raven Company is as shown: RAVEN COMPANY Partial Balance Sheet 1 Common stock, $10 par $250,000.00 2 Additional paid-in capital on common stock 150,000.00 3 Retained earnings 200,000.00 4 $600,000.00 Raven is considering the declaration and issuance of a stock dividend at a time when the market price is $30 per share. Required: 1. Assuming the board of directors recommends a 6% stock dividend, prepare: a. the journal entry at the date of declaration b. the journal entry at the date of issuance c. shareholders’ equity after the issuance 2. Assuming, instead, that a 40% stock dividend is recommended, answer a, b, and c of Requirement 1.
Beacon Corporation issued a 8 percent stock dividend on 35,000 shares of its $7 par common stock. At the time of the dividend, the market value of the stock was $30 per share. Required a. Compute the amount of the stock dividend. b. Show the effects of the stock dividend on the financial statements using a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave the cell blank. Complete this question by entering your answers in the tabs below. Required A Required B Show the effects of the stock dividend on the financial statements using a horizontal statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an element was not affected by the event, leave the cell blank. (Enter any decreases to account balances with a minus sign.)…
(b) The owners' equity account for Rantuil Utilities Berhad are shown below: Common Share (RM2 par) Capital Surplus Retained earnings Total shareholder's equity RM30,000 RM285,000 RM648,100 RM963,100 If Rantuil Utilities Berhad currently sells for RM30 per share and a 10 percent share dividend is declared, i. Determine the number of new shares that will be distributed. ii. Reconstruct new owners' equity account for Rantuil Utilities Berhad.
The Shareholders' Equity section of BFAR Corp. statement of financial position shows the following: Preference Share Capital, P100 par Ordinary Share Capital, P10 par Treasury Shares - ordinary, P12 cost/share Share Premium - Ordinary Share Premium - Preference Subscribed Ordinary Share Capital Subscription Receivable (2 years collectability) Share Premium on Subscribed Ordinary shares Share Premium on Treasury shares Accumulated Profits - Unappropriated (unadjusted) - beg 2,800,000 6,000,000 960,000 1,640,000 1,020,000 750,000 600,000 625,000 610,000 7,040,000 Dividends declared during the year is P500,000. Profit for the year is P800,000. Compute the Total Shareholders' Equity.
State the stockholder’s equity of the Alphabet Corporation if it has a current net profit of $1,500,000, beginning-of-the-period retained earnings of $3,675,000, 1 million shares of common stock issued at a par value of $1 per share, and paid-in capital in excess of par of $12.50 per share?
A corporation using the equity method of accounting for its investment in a 80%–owned investee, which earned $20,000 and paid $5,000 in dividends What is the ending balance of investment on 31/12 if investment in 1/1 amount 100,000$ ? Select one: a. 112,000 b. 115,000 c. 120,000 d. 100,00
4. A company has 500 shares with a price of JD 10 per share, and a net income available for common stocks of JD 1000. Required Find the P/E.
A corporation purchases 10,000 shares of its own $20 par common stock for $35 per share, recording it at cost. What will be the effect on total stockholders' equity? Select one: O a. increase, $200,000 O b. increase, $350,000 Oc decrease, $200,000 O d. decrease, $350,000
BFAR Corporation has the following information in its shareholders' equity: Ordinary Share Capital of P1,600,000 - P200 par value Share Premium, P400,000 Accumulated Profits of P900,000. ● A share dividend of 6% was declared when the share is selling at P500 per share. Compute the balance of Accumulated Profits after dividend declaration.

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