Desmond Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $840,000 $420,000 Issue preferred $1 stock, $10 par 700,000 Issue common stock, $5 par 840,000 560,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming that income before bond interest and income tax is $588,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 0.12 X Earnings per share on common stock 9.3 X Earnings per share on common stock Plan 2

Q: Define BOM along with an example.

A: There are different types of BOM based on the specific engineering used in the design process or…

Q: Explain CMO Mechanics?

A: Collateralized mortgage obligation: It is a financial instrument that raises funds by…

Q: How is ARR calculated?

A: ARR: Accounting Rate of Return (ARR) is the rate of return earned on the investment made in a…

Q: What is the purpose of EDI?

A: Transparency in electronic data exchange: Expanding EDI enables suppliers to get access to a buyer's…

Q: Define value chain.

A: Value Chain: Value Chain is the combination of activities including all the costs to do such…

Q: What is Gordon model?

A: Intrinsic value of a stock is based on the internal information of an organization. That is, market…

Q: What assumptions underlie the EOQ model?

A: The model that helps in calculating the optimal amount of quantity needs to be purchase for…

Q: Which of the following is not a primary function of the management accountant?a. Communicates…

A: Management accounting: Management accounting measures, analyzes and reports both financial and…

Q: Sensitivity Analysis Methods

A: Sensitivity analysis is an analysis method that is used to identify how many variations in the input…

Q: Describe the functions and powers of ASIC

A: Australian securities and investment commission is a commission made in 1998 of Australian…

Q: What is the purpose of EDI?

A: Electronic data interchange: The expansion of EDI is Electronic Data Interchange and it allows the…

Q: What is feasible set?

A: When investors manage their ‘financial assets’, like ‘bonds’, ‘shares’ and other financial…

Q: Explain NAREIT Index?

A: NAREIT Index Rate: It implies the compound dividend yield which is communicated as far as a yearly…

Q: Define correlation

A: Correlation: Correlation is a statistical method that can display whether and just how strongly…

Q: Describe the PW method?

A: There are different types of methods for comparing the worthiness of the projects. Some of the tem…

Q: What is Miller model?

A: It represents the impact of individual taxes or personal taxes into the valuation of a levered firm,…

Q: Define NRV method.

A: Definition:   Product costs: The costs incurred to acquire the merchandise, ship the stock, prepare…

Q: Consider REMICs?

A: A real estate mortgage investment conduit (REMIC) is a difficult puddle of mortgage securities…

Q: Define basis point

A: Answer: A base value is an approximate number, also used as an initial index value. All potential…

Q: What is MM Proposition I?

A: Modigliani and Miller’s approach is an element of economic theory and it forms the basis for modern…

Q: what does COGS means

A: Income statement: It implies to a financial statement that shows all the expenses incurred in a…

Q: What is PNL?

A: The term PNL is used in accounting, finance, and business to refer profit and loss.

Q: What is scalability?

A:

Q: What is alpha transfer?

A: The term ‘Alpha’ refers to the active return on investment. In other words, the excess return from…

Q: d. What is the expected value of perfect information?

A: The expected value of perfect information is the price that a healthcare decision-maker would be…

Q: Define efficient frontier

A: The efficient frontier is the collection of efficient portfolios, which provide the most expected…

Q: What is the LIFO conformity rule?

A: Last-in-First-Out (LIFO): In this method, items purchased recently are sold first. So, the value of…

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.