Throughout the calendar year 2020, Kali Corporation has 400,000 common shares outstanding (nopreferred shares issued). In addition, Collie has 5,000, 20-year, 7% bonds outstanding, issued at par in2018. Each $1,000 bond is convertible into 20 common shares after June 30, 2021. Collie reported netincome of $ 600,000 for calendar 2020. Their income tax rate is 30%. Required: Calculate basic anddiluted earnings per share for 2020. Solution: Please explain the solution Basic earnings per share: = $1.50 Incremental effect of conversion of bonds = $2.45 The conversion of the bonds would beantidilutive. No diluted EPS calculation is required. The basic and diluted earnings per share of $1

Basic earnings per share = Net Income/ Common shares outstanding…

Answered: diluted earnings per share for 2020.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Consider the following information for a period of years: Arithmetic Mean Long-term government bonds 7.6% Long-term corporate bonds 7.7 Inflation 4.6 What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the real return on long-term corporate bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Suppose Lion Cage Multinational floated 5000 bonds on January 1, 2020 with a par value of 1500 at stated rate of 16%. Currently, the market is selling these bonds at 18%. The bonds are expected to paid back by December 2030 with an interest paid quarterly effective March 1, 2020. What would be the bond price? Group of answer choices No choice given 7,485,006 6,708,900 7,584,000 6,870,050
All the securities below have annual payments. [Do not round interim calculations] Security Rating Maturity (yrs) Face Value Coupon Price T-Bill 1 $1,000 0% $982.33 T-Note 5 $1,000 2.40% $992.44 T-Bond 10 $1,000 3.25% $1,005.53 T-Bond 20 $1,000 3.90% $1,002.26 Corp Bond BBB 5 $1,000 3.80% $944.55 Corp Bond AA 10 $1,000 3.40% $968.12 Corp Bond A 20 $1,000 5.10% $982.35 What price would you pay for a 5-year, A bond with a coupon rate of 2.70%, a $1,000 Face Value and annual payments? 1. $958.32 2. $945.39 3. $1,001.33 4. $1,09.56 5. None of the above
Suppose the returns on long-term government bonds are normally distributed. Assume long-term government bonds have a mean return of 6.1 percent and a standard deviation of 9.8 percent. What is the approximate probability that your return on these bonds will be less than −3.7 percent in a given year? Use the NORMDIST function in Excel® to answer this question. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What range of returns would you expect to see 95 percent of the time? Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. What range would you expect to see 99 percent of the time? Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter…
(c) Re-calculate the prices of the bonds if the required return falls to 9%.(d) Explain how underwriters use the overallotment option in IPOs.
When market rates of interest decrease, the use of floating-rate debt benefits: Multiple Choice O O no one. investors. all parties. issuing companies. baved **********
42. Suppose in 2019 you by two year $1,000 face-value 3% coupon bond for $900. In 2020, interes rates decrease to 2%. If you decide to sell your bond in 2020, what will be the selling price of your bond and one-year rate of return for you? A. $1020; 20% B. $918; 5.3% C. $930; -2.1% D. $1,009.8; 15.5%
The rate of return on which one of the following has a risk premium of 0%? Multiple Choice Long-term government bonds Long-term corporate bonds Intermediate-term government bonds U.S. Treasury bills Large-company stocks
You are analyzing the after-tax cost of debt for a firm. You know that the firm's 12-year maturity, 11.00 percent semiannual coupon bonds are selling at a price of $1,229. Assuming that these bonds are the only debt outstanding for the firm. Problem 13.19 a1-a3(a1) Your answer is correct. What is the current YTM of the bonds? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.) YTM eTextbook and Media Problem 13.19 a1-a3(a2) Your answer is incorrect. 8 % After-tax cost of debt What is the after-tax cost of debt for this firm if it has a marginal tax rate of 34 percent? (Round final answer to 2 decimal places, e.g. 15.25%.) Attempts: 1 of 3 used %
Consider a coupon bond, period t = 0 price $900, with payments: t=0 1 2 3 50 50 1050 Discount (zero coupon) bonds of 1, 2 and 3 years maturity (all with maturity value of $1000) sell for respectively, 960, 900, 820 dollars. Is this coupon bond properly priced? If not, design an arbitrage argument to profit by the mispricing.
Borrower Inc. is currently estimating the value of its bonded indebtedness with the following information: Real risk-free rate is currently estimated at 4.25% • The expected inflation premium is at 1.75% Considering the current creditworthiness of Borrower Inc., it's credit spread is estimated at: o 2.0% for 3-year maturity instruments o 3.0% for 4-year maturity instruments o 4.0% for 5-year maturity instruments Borrower Inc. have the following issued bonded indebtedness: Bond A carries a 5-year tenor with a face value of Php500,000 issued 2 years ago carrying a coupon of 8.0% per annum. Bond B carries a 5-year tenor with a face value of Php600,000 issued a year ago carrying a coupon of 10.0% per annum. Bond C carries a 8-year tenor with a face value of Php400,000 issued 3 years ago carrying a coupon of 11.5% per annum. What is the value of Bond A? Clue - correct answer should have a string of number "00" appearing in sequence in any unit until two decimal points.
3. The following table gives actual data on the U.S. CPI and the S&P 500 total return index (SPTRI). CPI SPTRI 12/3 1/2011 226 2159 12/3 1/2012 230 2504 12/3 1/2013 233 3316 12/3 1/2014 235 3769 А. Use this data to compute the average annual nominal return and real return for two consecutive 1- year holding period returns of a sto ck portfolio that matches the S&P 500 total return index. (for example you could compute 2011-12 and 2012-2013) Please use continuous compounding. Express your final answer in percentage. В. Now compute the average annual real return to a 2-year holding -period portfolio of your two consecutive years. С. You have a friend who has been studying the stock market for the last few years and is about to invest $10,000 in a highly diversified portfolio. After 10 years, your friend expects to have over $66,000 in real dollars. You recall from your favorite report in Econ 135 that the average 10 year holding period return is about 7% with a standard deviation of 6%.…

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diluted earnings per share for 2020. Solution: Please explain the solution Basic earnings per share: = $ 1.50 Incremental effect of conversion of bonds = $2.45 The conversion of the bonds would be antidilutive. No diluted EPS calculation is required. The basic and diluted earnings per share of $1