Calculate:-cost of common equity from retained earnings, using the CAPM method.- cost of new common stock based on the CAPM Here is the condensed 2019 balance sheet for Sunrise Company (in thousands of dollars):Condensed 2019 Balance Sheet2019Current assets$2,000Net Fixed assets3,000Total assets$5,000Accounts payable and accurals$900Short term debt100Long term debt|1,100Preferred Stock (10,000 shares)250Common Stock (50,000 shares)|1,300Retained earnings|1,350Total common equity$2,650Total liabilities and equity$5,000Sunrise's earnings per share last year were $3.20. The common stock sells for $55.00, last year'sdividend (Do)was $2.10, and a flotation cost of 10% would be required to sell new common stock.Security analysts are projecting that the common dividend will grow at an annual rate of 9%. Sunrise'spreferred stock pays a dividend of $3.30 per share, and its preferred stock sells for $30.00 per share.The firm's before-tax cost of debt is 10%, and its marginal tax rate is 25%. The firm's currentlyoutstanding 10% annual coupon rate, long-term debt sells at par value. The market risk premium is 5%,the risk-free rate is 6%, and Sunrise's beta is 1.516. The firm's total debt, which is the sum of thecompany's short-term debt and long-term debt, equals $1.2 million.Use this data to answer the questions in the assignment.

Name: Calculate:-cost of common equity from retained earnings, using the CAP
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Description: Calculate:-cost of common equity from retained earnings, using the CAPM method.- cost of new common stock based on the CAPM Here is the condensed 2019 balance sheet for Sunrise Company (in thousands of dollars):Condensed 2019 Balance Sheet2019Current

Capital Asset Pricing Model (CAPM): The Capital Asset Pricing Model (CAPM) is used to price an asset…

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Calculate: -cost of common equity from retained earnings, using the CAPM method. - cost of new common stock based on the CAPM

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 3P: On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a...

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Balance Sheet Calculations Cornerstone Development Companys balance sheet information at the end of 2019 and 2020 is provided in random order, as follows: Additional information: At the end of 2019, (a) the amount of long-term liabilities is twice the amount of current liabilities and (b) there are 2,900 shares of common stock outstanding. During 2020, the company (a) issued 100 shares of common stock for 25 per share, (b) earned net income of 20,600, and (c) paid dividends of 1 per share on the common stock outstanding at year-end. Required: Next Level Fill in the blanks lettered (a) through (p). All of the necessary information is provided. (Hint: It is not necessary to calculate your answers in alphabetical order.)
Net Income and Comprehensive Income At the beginning of 2019, JR Companys shareholders equity was as follows: During 2019, the following events and transactions occurred: 1. JR recognized sales revenues of 108,000. It incurred cost of goods sold of 62,000 and operating expenses of 12,000, 2. JR issued 1,000 shares of its 5 par common stock for 14 per share. 3. JR invested 30,000 in available-for-sale securities. At the end of the year, the securities had a fair value of 35,000. 4. JR paid dividends of 6,000. The income tax rate on all items of income is 30%. Required: 1. Prepare a 2019 income statement for JR which includes net income and comprehensive income ignore earnings per share). 2. For 2016 prepare a separate (a) income statement (ignore earnings per share) and (b) statement of comprehensive income.
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On January 1, 2019, Kittson Company had a retained earnings balance of 218,600. It is subject to a 30% corporate income tax rate. During 2019, Kittson earned net income of 67,000, and the following events occurred: 1. Cash dividends of 3 per share on 4,000 shares of common stock were declared and paid. 2. A small stock dividend was declared and issued. The dividend consisted of 600 shares of 10 par common stock. On the date of declaration, the market price of the companys common stock was 36 per share. 3. The company recalled and retired 500 shares of 100 par preferred stock. The call price was 125 per share; the stock had originally been issued for 110 per share. 4. The company discovered that it had erroneously recorded depreciation expense of 45,000 in 2018 for both financial reporting and income tax reporting. The correct depreciation for 2018 should have been 20,000. This is considered a material error. Required: 1. Prepare journal entries to record Items 1 through 4. 2. Prepare Kittsons statement of retained earnings for the year ended December 31, 2019.
Prince Corporations accounts provided the following information at December 31, 2019: What should be the current balance of retained earnings? a. 520,000 b. 580,000 c. 610,000 d. 670,000
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