Problem 1: Book Value The following is the condensed balance sheet of Red Corporation as of the end of 2020 Amounts are in millions of pesos. ASSETS LIABILITIES AND EQUITY 5 Current Liabilities 15 Noncurrent Liabilities 20 Preference Share Capital, P1,000 par, 8% cumulative Ordinary Share Capital, P100 par Retained Earnings Current 1 Noncurrent ТОTAL 6 8. 2 ТОTAL 20 Dividends were not paid out during 2019 and 2020.
Problem 1: Book Value The following is the condensed balance sheet of Red Corporation as of the end of 2020 Amounts are in millions of pesos. ASSETS LIABILITIES AND EQUITY 5 Current Liabilities 15 Noncurrent Liabilities 20 Preference Share Capital, P1,000 par, 8% cumulative Ordinary Share Capital, P100 par Retained Earnings Current 1 Noncurrent ТОTAL 6 8. 2 ТОTAL 20 Dividends were not paid out during 2019 and 2020.
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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Required:
- How much is the book value per ordinary share?
- In case RED Corporation is liquidated, how much would be the total amount to be received by an investor who holds 2,000 ordinary shares and 1,000
preference shares ? - How much is the book value per ordinary share assuming the preference shares are also participating?
- Assuming the preference shares are also participating, in case RED Corporation is liquidated, how much would be the total amount to be received by an investor who holds 2,400 ordinary shares and 500 preference shares? Using Problem 1, how much is the book value per ordinary share assuming the preference shares are non-cumulative and participating up to 12%?
- Assuming the preference shares are non-cumulative and participating up to 12%, in case RED Corporation is liquidated, how much would be the total amount to be received by an investor who holds 2,400 ordinary shares and 500 preference shares?
Transcribed Image Text:Problem 1: Book Value
The following is the condensed balance sheet of Red Corporation as of the end of 2020.
Amounts are in millions of pesos.
ASSETS
LIABILITIES AND EQUITY
Current
5 Current Liabilities
Noncurrent
15
Noncurrent Liabilities
3
TOTAL
20 Preference Share Capital, P1,000 par, 8% cumulative
Ordinary Share Capital, P100 par
Retained Earnings
6
8
2
ТОTAL
20
Dividends were not paid out during 2019 and 2020.
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