It is January 2nd. Senior management of Digby meets to determine their investment plan for theyear. They decide to fully fund a plant and equipment purchase by issuing 50,000 shares of stockplus a new bond issue. The CFO happily notes this will raise their Leverage (-assets/equity) to anew target of 2.7. Assume the stock can be issued at yesterday's stock price ($37.86). Which of thefollowing statements are true? Check all that apply.Select: 3Digby will issue stock totaling $1,893,000Total investment for Digby will be $5,111,100The Digby bond issue will be $3,218,1004The Digby Working Capital will be unchanged at $16,095Total Assets will rise to $226,004,000Long term debt will increase from $83,016,908 to $84,909,908Save Answer

In the event that a stock company requires additional capital, the company has the option of selling…

Answered: It is January 2nd. Senior management of…

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter5: Gross Income: Exclusions

Section: Chapter Questions

Problem 50P

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Nutritious Pet Food Companys board of directors declares a 2-for-1 stock split on June 30 when the stocks market value per share is $30. At that time, there are 10,000 shares of $1 par value common stock outstanding (none held in treasury). What is the new par value of the shares and how many shares are outstanding after the split? What is the total amount of equity before and after the split?
Comprehensive Young Corporation has been operating successfully for several years. It is authorized to issue 24,000 shares of no-par common stock and 6,000 shares of 8%, 100 par preferred stock. The Contributed Capital section of its January 1, 2019, balance sheet is as follows: Part a. A shareholder has raised the following questions: 1. What is the legal capital of the corporation? 2. At what average price per share has the preferred stock been issued? 3. How many shares of common stock have been issued (the common stock has been issued at an average price of 23 per share)? Part b. The company engaged in the following transactions in 2019: Required: 1. Answer the questions in Part a. 2. Prepare journal entries to record the transactions in Part b. 3. Prepare the Contributed Capital section of Youngs December 31, 2016, balance sheet.
It is January 2nd and senior management of Baldwin meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing 75,000 shares of stock plus a new bond issue. Assume the stock can be issued at yesterday’s stock price ($42.57) and leverage changes to 2.7. Which of the following statements are true? Select all that apply. Select: 3 •Total liabilities will be $150,548,149 •Total assets will rise to $238,527,765 •Working capital will remain the same at $16,224,801 •The total investment for Baldwin will be $25,924,850 •Baldwin will issue stock totaling $3,192,750
On September 6, 2020, the board of directors of Peterson Manufacturing voted to distribute $4,600,000 to the firm's stockholders.If the firm has issued 75,000 shares of 4% preferred stock with a par value of $10 and 1,870,000 shares of common stock outstanding, calculate the following. (Round all answers to the nearest cent.) 1. Dividend per share of preferred stock: $ 2. Dividend per share of common stock:
On January 20, Sullivan Inc., sold 10 million shares of stock in an SEO. The market price of Sullivan at the time was $40.25 per share. Of the 10 million shares sold, 4 million shares were primary shares being sold by the company, and the remaining 6 million shares were being sold by the venture capital investors. Assume the underwriter charges 4.5% of the gross proceeds as an underwriting fee. a. How much money did Sullivan raise? b. How much money did the venture capitalists receive? c. If the stock price dropped 2.7% on the announcement of the SEO and the new shares were sold at that price, how much money would Sullivan receive?
KBS enterprise is selling one of its division for $80million cash.At the upcoming quarterly board meeting, KBS board of directors are to decide whether to use the entire funds for a cash dividend or carry out a repurchase of 2million shares valued at $80million.both options will have some possible effects on the company. The company has a long term record of gradually increasing dividend.As the head of treasury, providing an in depth discussion of at least three factors that the board of directors would need to keep in perspective when making their final decision
Maxwell Corp. is coming to the market with a new offering of 450,000 shares of stock at $22 to the public. Maxwell will receive $19 per share. The firm has one million shares outstanding and earnings of $6 million before recording the new issue. What is the amount of earnings per share after the stock issuance?
On January 1, 2023, Monty Corp. had 206,000 common shares outstanding. On April 1, 2023, 20,600 common shares were issued and on September 1, 2023, Bernard bought back 30,600 treasury shares. The market price of the common shares averaged $50 during 2023. The corporation’s income tax rate is 40%.During 2023, there were 30,600 call options to buy common shares at $40 a share outstanding; and there were 20,600, $8, no par value, cumulative and convertible preferred shares outstanding. Each preferred share is convertible into three common shares.During 2022, the corporation had issued $1,910,000 of 7% convertible bonds at face value. Each $1,000 bond is convertible into 20 common shares.The corporation reported $780,000 net income for calendar 2023. Post answers in table below Security Net Income Adjustemt Adjusted Net Income Shares Adjustment Adjusted Shares EPS Comon Shares Options Preferred Shares Bonds
On January 20, Metropolitan Inc., sold 8 million shares of stock in an SEO. The market price of Metropolitan at the time was $40.25 per share. Of the 8 million shares sold, 5 million shares were primary shares being sold by the company, and the remaining 3 million shares were being sold by the venture capital investors. Assume the underwriter charges 5.1% of the gross proceeds as an underwriting fee. a. How much money did Metropolitan raise? b. How much money did the venture capitalists receive? c. If the stock price dropped 3.4% on the announcement of the SEO and the new shares were sold at that price, how much money would Metropolitan receive?
Aspin Corporation's charter authorizes issuance of 2,600,000 shares of common stock.Currently, 1,200,000 shares are outstanding, and 300,000 shares are being held as treasury stock. The firm wishes to raise $105,000,000 for a plant expansion. Discussions with its investment bankers indicate that the sale of new common stock will net the firm $70 per share. a. What is the maximum number of shares of common stock that the firm can sell without receiving further authorization from shareholders? b. Judging by the data given and your finding in part a,do you think the firm will be able to raise the needed funds without receiving further authorization? c. What must the firm do to obtain authorization to issue more than the number of shares found in part a?
On January 1, 2023, Concord Corp. had 212,000 common shares outstanding. On April 1, 2023, 21,200 common shares were issued and on September 1, 2023, Bernard bought back 31,200 treasury shares. The market price of the common shares averaged $50 during 2023. The corporation’s income tax rate is 40%.During 2023, there were 31,200 call options to buy common shares at $40 a share outstanding; and there were 21,200, $7, no par value, cumulative and convertible preferred shares outstanding. Each preferred share is convertible into three common shares.During 2022, the corporation had issued $1,950,000 of 9% convertible bonds at face value. Each $1,000 bond is convertible into 20 common shares.The corporation reported $810,000 net income for calendar 2023.Calculate diluted earnings per share for 2023. Complete the schedule below. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round earnings per share to 2 decimal places, e.g.…
Witter House is a calendar-year firm with 300 million common shares outstanding throughout 2018 and 2019.As part of its executive compensation plan, at January 1, 2017, the company had issued 30 million executivestock options permitting executives to buy 30 million shares of stock for $10 within the next eight years, but notprior to January 1, 2020. The fair value of the options was estimated on the grant date to be $3 per option.In 2018, Witter House began granting employees stock awards rather than stock options as part of its equitycompensation plans and granted 15 million restricted common shares to senior executives at January 1, 2018.The shares vest four years later. The fair value of the stock was $12 per share on the grant date. The averageprice of the common shares was $12 and $15 during 2018 and 2019, respectively.The stock options qualify for tax purposes as an incentive plan. The restricted stock does not. The company’snet income was $150 million and $160 million in 2018…

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