ing company is required to determine the cost of capital for its common shares. The company expects to pay a dividend of $ 1.45 by the end of the year (2021). The following table shows the dividends for the last 5 years. Year Dividend 2020 $ 1.3 2019 1.2 2018 1.1 2017 1 2016 0.98 2015 0.90 After administrative costs, the company e
Q: During 2019, Minh Corporation had a net income of $144,000. Ordinary share capital was $200,000 at 1…
A: The cash flow statement assesses a corporation's ability to handle its cash balance, or how…
Q: Minnesota Manufacturing's balance sheet showed total common equity of $3,000,000 and 500,000 shares…
A: Book value per share can be calculated by dividing total shareholders equity at the end of the year…
Q: The ledger of Sadaf Oman Company showed the following final balances at the end of the year 2020…
A: Accounts Debit Credit Share capital 4200 Accounts payable 4800 Reserve 63000 Expense…
Q: Terry Company began operations on January 1, 2019, with an investment of $62,000 by each of its two…
A:
Q: Brooks Sporting Inc. is prepared to report the following 2018 income statement(shown in thousands of…
A: Calculation of dividends per share in the year 2018:
Q: At December 31, 2020, Sager Co. had 1,200,000 shares of common stock outstanding. In addition, Sager…
A: Diluted earnings per share = Net Income /(Weighted average number of ordinary and dilutive…
Q: The income statement of Bulldogs Inc. in 2022 reflects a net Income of P2,050,000. The dividend…
A: Given Information : Net Income = P2,050,000 Annual Dividend = P2 Dividend Yield = 20%
Q: The balance in the retained earnings at December 31, 2019 and 2020 respectively are ₱720,000 and…
A: Cash dividends are the excess of profit that is distributed to the shareholders (owners) in the form…
Q: During 2020, ABC Co. had net income of $900,000. The company has 20,000 shares of 5%, $100 par,…
A: Basic EPS is calculated by dividing the net income by total number of outstanding shares.Diluted EPS…
Q: Shilling Company reports the following information for its fiscal year-end of March 31, 2019: Common…
A: Paid-in capital in excess of par – Common = Total stockholders’ equity - Common stock - Retained…
Q: ABS Co. had 900,000 ordinary shares issued and outstanding at December 31, 2019. On July 1, 2020 an…
A: First, calculate the diluted effect on stocks: Stock option dilluted effect=Share option…
Q: On December 31, 2020, Blue Devil Inc. has a ending balance of total shareholders' equity of…
A: Dividends means part of profits that is distributed to the shareholders of the company. It can be in…
Q: ABC Company had 600,000 ordinary shares outstanding on January 1, 2020. During 2020, ABC Company…
A: Right shares- When the entity issued shares to its exiting shareholders with a right to subscriber…
Q: During 2019 Sasha Corporation reported a net income of $1,529,500. On January 1, 2020, Sasha had…
A: Part of shares issued on oct 1=210,000×312=52,500
Q: Terry Company began operations on January 1, 2019, with an investment of $62,000 by each of its two…
A: companies ending stockholders equity = opening equity + additions to equity stock during the year +…
Q: Red Hat Company began operations in January 2018 and reported the following results of operations…
A: Book value per common stock = (Total stockholder's equity-(liquidation value of preferred stock+…
Q: Tommy’s Automotive Group currently has 6,400,000 shares of stock outstanding and will report…
A: Calculate the value of immediate dilution potential for this new stock issue. We have,Earnings per…
Q: The following details were summarized for National Corporation: Year 2017 Per Share Dividend P2.99…
A: Here, Current Market Price is P62 Issuance Expense per Share is P2.00
Q: how much should ABC Company report as basic Earnings Per Share?
A: Formula: Ex- Right Price= Old Shares×Market Price+New Shares×Issue PriceOld Shares+ New Shares EPS=…
Q: The Dark Red Company, which started operations in 2018, paid dividends at the end of 2018,2019 and…
A: The participating preference shareholder is entitled for fixed preference dividend and also the…
Q: On April 1, 2020, Biggins Co. received P350,000 cash dividends, one-third of which represents…
A: Regular Dividends are given by the business organizations to their shareholders from the retained…
Q: The board of directors of Tamarisk, Inc. declared a cash dividend of $2.25 per share on 30000 shares…
A: Journal Entries are the entries to be recorded in the accounting books of the business for all the…
Q: A company had profit after tax of €50,000,000 for the year ended 31 December 2020. The number of…
A: Split of shares All traded on an open market organizations have a set number of offers that are…
Q: Cooper Industries, Inc., began 2021 with retained earnings of $25.11 million. During the year it…
A: Solution:- Preparation of Statement of Retained Earnings For the year ended 31,2021 as follows…
Q: In 2020, analytics showed that the current assets increased by 25%, noncurrent assets increased by…
A: Computation of book value as of December 2019:- Particulars Amount Current assets 15,00,000…
Q: ippy Co has 1,000,000 issued ordinary shares which are traded in an efficient capital market. The…
A: Note: This post contains several questions. The first (Question No. 4) has been answered below.
Q: Sendee Company's retained earnings on December 31, 2020 was $2,150,000 and its shareholders' equity…
A: NET INCOME = $250,000 LESS : CASH DIVIDEND = $75,000 1. BALANCE INCOME TRANSFERRED TO RETAINED…
Q: In January 2021, Tesla Inc shares were priced at $860. The value of the company at that stock price…
A: Price earning ratio- It is used for valuing a company and it is calculated as Market price of share…
Q: Al Hamra Company issues 500,000 shares of common stock on January 1, 2020 trading at RO 0.200 per…
A: “Since you have asked multiple question, we will solve the first question for you. If you want any…
Q: The income statement of PNE Inc. in 2022 reflects a net Income of P2,050,000. The dividend policy of…
A: Annual cash dividend = P 2 Dividend yield = 20%
Q: On January 1, 2020, a company issued 10-year, $330,000 face value, 7% bonds, at par. Each $1,000…
A: Potential common stock = (Face value of bonds / par value per bond) x convertible ratio = ($330,000…
Q: he Gangnam Company began operations in January 2019 and reported the following results for each of…
A: calculation of book value of ordinary share are as follows
Q: GMA Co. had 900,000 ordinary shares issued and outstanding at December 31, 2019. On July 1, 2020 an…
A: Diluted Weighted Average Shares is the number of shares used to measure Diluted EPS. This is used as…
Q: Belton, Inc. had the following transactions in 2018, its first year of operations: Issued 37,000…
A: The total paid-in capital will be calculated by multiplying the shares issued by the company by the…
Q: Abajo, Inc. went into business on January 1, 2017 when it issued 100 shares of stock for $10,000. No…
A: Return on Equity = Net IncomeShareholder's Equity it is the measure of financial performance and it…
Q: answer the questions
A: Formula:
Q: he accounting year / self capital at the beginning of the accounting year) of Xijiang in each…
A: Internal retention ratio is calculated as shown below. Internal retention ratio=Net…
Q: For the last three years, Squarepants Corporation paid the following cash dividends: 2016 - P…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Grant Inc. reported retained earnings of $287,000 on its balance sheet on 12/31/2020, and it had…
A: Closing retained earnings = Opening retained earnings + Net income for the year - Dividends paid…
Q: Novak Company’s net income for 2020 is $594,000, and 91,000 shares of common stock were issued and…
A: Diluted Earning Per Share: If all convertible securities were converted, the company's profits per…
Q: Answer the questions based on the Data Table.
A: (1) Calculation of the EPS:EPS can be calculated by the following formula:EPS = (Net Income –…
Q: A company has net earnings of AED 10,000 for the current vear and suppose the company maintains the…
A: In order to determine the earnings per share, the earnings available to equity shareholders are…
Q: Himalaya Ltd.’s reporting period is from 1 January to 31 December. Year 2022: At the beginning of…
A: Rights issue refers to the an offer to subscribe to the newly issued shares by the existing…
Q: At the beginning of 2020, Tucker Corporation had assets of $350,000 and liabilities of $175,000. At…
A: Shareholders' funds included the value of the common stock, the value of preferred stock retained…
Q: GMA Co. had 900,000 ordinary shares issued and outstanding at December 31, 2019. On July 1, 2020 an…
A: Share dilution occurs when a business issues new stock, reducing a current shareholder's ownership…
Q: On 2021, Bulldogs Inc. net income doubled from the 2020 figure. The number of outstanding shares is…
A: Calculation of total income for 2021: Earnings per share = Payment per shareholder ÷ Pay-out ratio…
Q: Use the constant dividend growth model to determine the market value of each ordinary share. 2.…
A: “Since you have posted a question with multiple subparts, we will solve first three subparts for…
Q: In 2018, Jake's Jamming Music, Inc. announced an ROA of 8.46 percent, ROE of 13.50 percent, and…
A: Return on assets and return on equity are also known as profitability ratios. These ratios show the…
Q: What is the total amount of dividends to be distributed during the year assuming no equity…
A: Date Particulars Amount 1 Jan Shares Outstanding 400,000 15 Feb Add: Shares issued 25,500…
A trucking company is required to determine the cost of capital for its common shares. The company expects to pay a dividend of $ 1.45 by the end of the year (2021). The following table shows the dividends for the last 5 years.
Year Dividend
2020 $ 1.3
2019 1.2
2018 1.1
2017 1
2016 0.98
2015 0.90
After administrative costs, the company expects to earn $ 25 per share from a new issue and has a 15% market rate.
a) Determine the growth rate of dividends from 2016 to 2020. (g =?)
b) Determine the value or price of the shares
Step by step
Solved in 3 steps with 1 images
- Roseau Company is preparing its annual earnings per share amounts to be disclosed on its 2019 income statement. It has collected the following information at the end of 2019: 1. Net income: 120,400. Included in the net income is income from continuing operations of 130,400 and a loss from discontinued operations (net of income taxes) of 10,000. Corporate income tax rate: 30%. 2. Common stock outstanding on January 1, 2019: 20,000 shares. 3. Common stock issuances during 2019: July 6, 4,000 shares; August 24, 3,000 shares. 4. Stock dividend: On October 19, 2019, the company declared a 10% stock dividend that resulted in 2,700 additional outstanding shares of common stock. 5. Common stock prices: 2019 average market price, 30 per share; 2019 ending market price, 27 per share. 6. 7% preferred stock outstanding on January 1, 2019: 1,000 shares. Terms: 100 par, nonconvertible. Current dividends have been paid. No preferred stock issued during 2019. 7. 8% convertible preferred stock outstanding on January 1, 2019: 800 shares. The stock was issued in 2018 at 130 per share. Each 100 par preferred stock is currently convertible into 1.7 shares of common stock. Current dividends have been paid. To date, no preferred stock has been converted. 8. Bonds payable outstanding on January 1, 2019: 100,000 face value. These bonds were issued several years ago at 97 and pay annual interest of 9.6%. The discount is being amortized in the amount of 300 per year. Each 1,000 bond is currently convertible into 22 shares of common stock. To date, no bonds have been converted. 9. Compensatory share options outstanding: Key executives may currently acquire 3,000 shares of common stock at 20 per share. The options were granted in 2018. To date, none have been exercised. The unrecognized compensation cost (net of tax) related to the options is 4 per share. Required: 1. Compute the basic earnings per share. Show supporting calculations. 2. Compute the diluted earnings per share. Show supporting calculations. 3. Show how Roseau would report these earnings per share figures on its 2019 income statement. Include an explanatory note to the financial statements.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.Hyde Corporations capital structure at December 31, 2018, was as follows: On July 2, 2019, Hyde issued a 10% stock dividend on its common stock and paid a cash dividend of 2.00 per share on its preferred stock. Net income for the year ended December 31, 2019, was 780,000. What should be Hydes 2019 basic earnings per share? a. 7.80 b. 7.09 c. 7.68 d. 6.73
- Monona Company reported net income of 29,975 for 2019. During all of 2019, Monona had 1,000 shares of 10%, 100 par, nonconvertible preferred stock outstanding, on which the years dividends had been paid. At the beginning of 2019, the company had 7,000 shares of common stock outstanding. On April 2, 2019, the company issued another 2,000 shares of common stock so that 9,000 common shares were outstanding at the end of 2019. Common dividends of 17,000 had been paid during 2019. At the end of 2019, the market price per share of common stock was 17.50. Required: 1. Compute Mononas basic earnings per share for 2019. 2. Compute the price/earnings ratio for 2019.Lyon Company shows the following condensed income statement information for the year ended December 31, 2019: Lyon declared dividends of 6,000 on preferred stock and 17,280 on common stock. At the beginning of 2019, 10,000 shares of common stock were outstanding. On May 1, 2019, the company issued 2,000 additional common shares, and on October 31, 2019, it issued a 20% stock dividend on its common stock. The preferred stock is not convertible. Required: 1. Compute the 2019 basic earnings per share. 2. Show the 2019 income statement disclosure of basic earnings per share. 3. Draft a related note to accompany the 2019 financial statements.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.)
- Frost Company has accumulated the following information relevant to its 2019 earningsper share. 1. Net income for 2019: 150,500. 2. Bonds payable: On January 1, 2019, the company had issued 10%, 200,000 bonds at 110. The premium is being amortized in the amount of 1,000 per year. Each 1,000 bond is currently convertible into 22 shares of common stock. To date, no bonds have been converted. 3. Bonds payable: On December 31, 2017, the company had issued 540,000 of 5.8% bonds at par. Each 1,000 bond is currently convertible into 11.6 shares of common stock. To date, no bonds have been converted. 4. Preferred stock: On July 3, 2018, the company had issued 3,800 shares of 7.5%, 100 par, preferred stock at 108 per share. Each share of preferred stock is currently convertible into 2.45 shares of common stock. To date, no preferred stock has been converted and no additional shares of preferred stock have been issued. The current dividends have been paid. 5. Common stock: At the beginning of 2019, 25,000 shares were outstanding. On August 3, 7,000 additional shares were issued. During September, a 20% stock dividend was declared and issued. On November 30, 2,000 shares were reacquired as treasury stock. 6. Compensatory share options: Options to acquire common stock at a price of 33 per share were outstanding during all of 2019. Currently, 4,000 shares may be acquired. To date, no options have been exercised. The unrecognized compens Frost Company has accumulated the following information relevant to its 2019 earnings ns is 5 per share. 7. Miscellaneous: Stock market prices on common stock averaged 41 per share during 2019, and the 2019 ending stock market price was 40 per share. The corporate income tax rate is 30%. Required: 1. Compute the basic earnings per share. Show supporting calculations. 2. Compute the diluted earnings per share. Show supporting calculations. 3. Indicate which earnings per share figure(s) Frost would report on its 2019 income statement.ALTERNATIVE DIVIDEND POLICIES In 2018, Keenan Company paid dividends totaling 3,600,000 on net income of 10.8 million. Note that 2018 was a normal year and that for the past 10 years, earnings have grown at a constant rate of 10%. However, in 2019, earnings are expected to jump to 14.4 million and the firm expects to have profitable investment opportunities of 8.4 million. It is predicted that Keenan will not be able to maintain the 2019 level of earnings growth because the high 2019 earnings level is attributable to an exceptionally profitable new product line introduced that year. After 2019, the company will return to its previous 10% growth rate. Keenans target capital structure is 40% debt and 60% equity. a. Calculate Keenans total dividends for 2019 assuming that it follows each of the following policies: 1. Its 2019 dividend payment is set to force dividends to grow at the long-run growth rate in earnings. 2. It continues the 2018 dividend payout ratio. 3. It uses a pure residual dividend policy (40% of the 8.4 million investment is financed with debt and 60% with common equity). 4. It employs a regular-dividend-plus-extras policy, with the regular dividend being based on the long-run growth rate and the extra dividend being set according to the residual dividend policy. b. Which of the preceding policies would you recommend? Restrict your choices to the ones listed but justify your answer. c. Assume that investors expect Keenan to pay total dividends of 9,000,000 in 2019 and to have the dividend grow at 10% after 2019. The stocks total market value is 180 million. What is the companys cost of equity? d. What is Keenans long-run average return on equity? [Hint: g = Retention rate ROE = (1.0 Payout rate)(ROE)] e. Does a 2019 dividend of 9,000,000 seem reasonable in view of your answers to parts c and d? If not, should the dividend be higher or lower? Explain your answer.Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1, 000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50, 000 to retire bonds with a face value (and book value) of 50, 000. e. On July 2, 2019, Farrell purchased equipment for 63, 000 cash. f. On December 31, 2019, land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows. (Appendix 21.1) Spreadsheet and Statement Refer to the information for Farrell Corporation in P21-13. Required: 1. Using the direct method for operating cash flows, prepare a spreadsheet to support a 2019 statement of cash flows. (Hint: Combine the income statement and December 31, 2019, balance sheet items for the adjusted trial balance. Use a retained earnings balance of 291,000 in this adjusted trial balance.) 2. Prepare the statement of cash flows. (A separate schedule reconciling net income to cash provided by operating activities is not necessary.)
- Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1,000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50,000 to retire bonds with a face value (and book value) of 50,000. e. On July 2, 2019, Farrell purchased equipment for 63,000 cash. f. On December 31, 2019. land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows.CALCULATING THE WACC Here is the condensed 2019 balance sheet for Skye Computer Company (in thousands of dollars): Skyes earnings per share last year were 3.20. The common stock sells for 55.00. last years dividend (D0) 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%. Skyes preferred stock pays a dividend of 3.30 per share, and its preferred stock sells for 30.00 per share. The firms before-lax cost of debt is 10%, and its marginal tax rate is 25%. The firms currently outstanding 10% annual coupon rate, long-term debt sells at par value. The market risk premium is 5%, the risk-free rate is 6%, and Skyes beta is 1.516. The firms total debt, which is the sum of the companys short-term debt and long-term debt, equals 1.2 million. a. Calculate the cost of each capital component, that is, the after-tax cost of debt, the cost of preferred stock, the cost of equity from retained earnings, and the cost of newly issued common stock. Use the DCF method to find the cost of common equity. b. Now calculate the cost of common equity from retained earnings, using the CAPM method. c. What is the cost of new common stock based on the CAPM? (Hint: Find the difference between r1 and rs as determined by the DCF method, and add that differential to the CAPM value for rs.) d. If Skye continues to use the same market-value capital structure, what is the firms WACC assuming that (1) it uses only retained earnings for equity and (2) if it expands so rapidly that it must issue new common stock?Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for Apple. What was the amount of revenues (i.e., sales) generated by the company in 2017? What were the latest annual dividends per share and dividend yield? What is the earnings per share (EPS) projection for 2019? How many shares of common stock were outstanding? What were the book value per share and EPS in 2017? How much long-term debt did the company have in the third quarter of 2018?
