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The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 of after-tax profit. The options are: 1 - Issuing an additional $1,000,000 of 10% 100 par convertible preferred stock (same class as currently outstanding), share converted into 10 shares common stock 2 - Issue an additional $1,000,000 of 8% convertible bonds, what is each $1000 bond converted into? when converted to 5 shares of common stock? 3 - $500,000 each of preferred stock and bonds I am drawing a complete blank on how to convert these.

The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 of after-tax profit. The options are: 1 - Issuing an additional $1,000,000 of 10% 100 par convertible preferred stock (same class as currently outstanding), share converted into 10 shares common stock 2 - Issue an additional $1,000,000 of 8% convertible bonds, what is each $1000 bond converted into? when converted to 5 shares of common stock? 3 - $500,000 each of preferred stock and bonds I am drawing a complete blank on how to convert these.

FINANCIAL ACCOUNTING
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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The company expects this expansion will require an additional $1,000,000 of capital and generate an additional $600,000 of after-tax profit. The options are:

1 - Issuing an additional $1,000,000 of 10% 100 par convertible preferred stock (same class as currently outstanding), share converted into 10 shares common stock

2 - Issue an additional $1,000,000 of 8% convertible bonds, what is each $1000 bond converted into? when converted to 5 shares of common stock?

3 - $500,000 each of preferred stock and bonds

I am drawing a complete blank on how to convert these. 

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