The following data on the Bond Record Company are available: Earnings available for common stockholders $700,000 Number of shares of common stock outstanding 350,000 Earnings per share ($700,000÷350,000) $2 Market price per share $34
Q: Wayne borrowed money to purchase his son's hockey equipment. He made month-end loan payments of $55…
A: Wayne Equipment: Month end payments = $55 Interest rate Compounded Monthly is 7.8% Time period 2…
Q: Please explain the rationale why "There is no constant growth in dividends" in your example?…
A: Dividend-It is a distribution of company's profit to a class of its shareholders. The amount of…
Q: What is the holding period return over the 10 weeks for the S&P 500? 3+ decimals What is the…
A: Return means earn additional over the invested amount during the period. Holding period return…
Q: Blue Company, have developed a new cellular phone battery that high performance flash drive and…
A: Rate of return based on average investment Rate of return based on average investment is calculated…
Q: All the following are assets for commericial banks exept: A) loans B)cash C)Deposits…
A: A commercial bank is a type of financial organisation that handles all activities linked to…
Q: Seven years ago, you deposited $1000 into an account earning r = 10% APR compounded annually. How…
A: Future value: Future worth (FV) is the sum to which an ongoing venture will develop after some time…
Q: Find the capitalized cost of a present cost of P800,000, annual costs of P55,000, and periodic costs…
A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…
Q: A firm sets aside $26000 today in an account earning 8% APR compounded annually. The purpose of the…
A: Amount set aside today(Present Value) is $26000 Interest rate(rate) is 8% compounded annually…
Q: 1. . Identify the given statement whether simple annuity or general annuity. A. Installment…
A: The simple annuity is which payment and interest compounding is same but in general annuity both may…
Q: A firm's stock has a required return of 9.00%. The stock's dividend yield (using the dividend to be…
A: Required rate of return = 9.00% Stock price = $34 Dividend yield = 5.00% Next dividend = Stock…
Q: You are an analyst for a large public pension fund and you have been assigned the task of evaluating…
A: Alpha of fund-The extra returns over the market benchmark for a given amount of risk taken by the…
Q: A company considering water flooding plan for one its small oil field, the chances of success is as…
A: Here, To Find: Investment should be made or not =?
Q: Normally, the usual repayment period for a long-term loan is three to seven years.; True or False
A: Long Term Loan: The common feature of long-term loans is that their period lies between 3 to 25…
Q: Calculate the actual portfolio return, rp, for each of the 6 years. b. Calculate the expected…
A: Portfolio Return: It is computed by the sum of individual securities returns which are…
Q: what is the present worth of this investment?
A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…
Q: The Treasury Department issues a 10-year coupon bond on January 1st, 2022. The first coupon is due…
A: Bond value The present bond value is the present value of all future cash flows. The cash flows…
Q: 28. What is scarcity? O Balancing unlimited wants with lim OBalancing trade between different:…
A: Scarcity is the gap between scarce resources and unlimited wants that are never-ending but to…
Q: what is the benefit cost ratio?
A: net present value revenue = 1.5 cost revenue - cost = NPV 1.5cost -cost = 250000 cost = 500000…
Q: If 10,000php is invested in account paying 6% compounded quarterly; A. How much will be in the…
A: Future Value refers to the value of the current asset or investment or of cash flows at a specified…
Q: Finance Approximately how much would you need to invest today, to receive $280 in ten years, if you…
A: Future Value is $280 Time period is 10 years Interest rate is 10% To Find: Present Value
Q: An investor has two bonds in his portfolio that have a face value of $1,000 and pay an 11% annual…
A: Bonds are the debt securities which are issued by the corporations or the government to arrange the…
Q: how much would he need to invest today?
A: Present Value: It represents the present value of the future sum of the amount and is computed by…
Q: Suppose the stock price is currently $75. For the next six months there is 7.5% probability that the…
A: Present value of call option using One period binomial model In one period time, there is a chance…
Q: Determine the present worth of the given cash flow. Draw a cash flow diagram and explain your work…
A: Time value of money (TVM) refers to the method used to measure the amount of money at different…
Q: Compute the Asset Quality Index and select the best Answer: 12/31/2020…
A: The Asset Quality Index: The Asset Quality indicates the relative increase or decrease in the…
Q: A report from the marketing department indicates that a new product will generate the following…
A: Discount rate is 11% To Find: Present Value
Q: A company can purchase a piece of equipment for $4,230. The equipment has a three-year life and…
A: Initial cost = $4,230 Annual cash inflow year 1 = $1,350 Annual cash inflow year 2 = $1,350 Annual…
Q: Maria wishes to accumulate $8,000 by the end of 5 years by making equal, annual, end-of-year…
A: Here we will use the concept of time value of money. As per the concept of time value of money the…
Q: If you invest P5,000 in a mutual fund with a total annual return (interest rate) of 8% and you…
A: Amount invested(PV) is P 5,000 Interest rate(rate) is 8% Time period is 5 year. To Find: Value of…
Q: Holding the APR constant, as the number of compounding periods per year increases, the periodic rate…
A: Present value of an amount to be received in future can be calculated as: = Future amount/ (1 + rate…
Q: United Airlines is considering adding a new hub operation in Blue Lagoon. The finance group at UAL…
A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…
Q: Alternative K the preferred alternative? [A] 0%<=MARR<=8.144169% [B] 4.2775% <=MARR<=8.144169% [C]…
A: The MARR is minimum attractive rate of return that project must earn to satisfy the investors and to…
Q: The following is a simplified balance sheet of a large commercial bank. Based on this information,…
A: Given: All figs. in billions of GBP Working Note #1 Computation of Total Assets: Cash &…
Q: yons, CEO of Lyons Solar Technologies, is concerned about his firm’s level of debt financing. The…
A: The value of company can be found as the present value of future cash considering unlevered cost of…
Q: High Roller Properties is considering building a new casino at a costof $10 million at t = 0. The…
A: Data given: Cost of new casino (at t=0) = $10 million WACC = 11% Cash flow with tax=$1.875 million…
Q: Prime Paints is in the process of evaluating two mutually exclusive additions to its processing…
A: Calculation of range of cash outflows: Range of annual cash outflows= Optimistic cash flow -…
Q: What is your yield to maturity on the bond given the market price of the bonds?
A: Yield To Maturity: It is the total expected rate of return for the bondholder given all the coupon…
Q: Jessica purchased an electric guitar from Music World. The purchase price was $2,700. She took…
A: Given that the current purchase price is $2700. We have to find the number of annuity of $150…
Q: a) What single investment made today, earning 12% annual interest, will be worth $6,000 at the end…
A: The question is related to Time value of money. The present value is calculated with the help of…
Q: In Aug. 2007, Irene Engels borrowed $50,000, and she borrowed another $50,000 in Aug. 2008, for…
A: 1st loan 01-08-2007 $50000 2nd loan 01-08-2008 $50000 Interest Rate 2% Compounding monthly…
Q: A company considering water flooding plan for one its small oil field, the chances of success is as…
A: Capital Budgeting is a concept that is used to evaluate the most effective investment by comparing…
Q: You just placed $3000 in a fund expected to earn 12% APR compounded monthly. At that rate, how many…
A: Amount placed now(PV) is $3000 Interest rate Compounded monthly is 12% Monthly interest rate is…
Q: What is CAPM and how it used in portfolio management?
A: Risk and return are the two main parts of any investment and before investing in any security or…
Q: A firm has $26000 in an account in order to finance a $32000 expenditure in 2 years. What minimum…
A: Current Value is $26000 Future Value of expenditure is $32000 Time period is 2 years To Find: APR,…
Q: Johan wants to buy a car on hire purchase for N$49000 at the rate of 12% p.a. repayable using…
A: Monthly payment amount for this hire purchase may be calculated through the following formula…
Q: You manage three funds: a Stock Fund (r 15%, sigma 32%), a Bond Fund (r 9%, sigma 23%) and a T-Bill…
A: The volatility of a portfolio is used to measure the risk of the portfolio, i.e., how much variation…
Q: # 1 Interest Amount Present Value $16,775.00 Interest Rate Time 0.5% per month 6 months Future Value
A: Future Value: The future value is the amount that will be received at the end of a certain period.…
Q: Jaleel knows that the primary purpose of a futures contract is the management ofrisk exposures. Use…
A: Future contract: A futures contract is legitimately official consent to buy or sell a particular…
Q: source of finance is the middle layer between equity and debt
A: Mezzanine debt is the source of finance which is the middle layer between equity and debt.…
Q: Just a quick question for this answer. Isnt N supposed to be 4 years and not 5? As the growth is…
A: Year Dividend 1 13 p 2 14 p 3…
The following data on the Bond Record Company are available:
Earnings available for common stockholders
|
$700,000
|
Number of shares of common stock outstanding
|
350,000
|
Earnings per share
($700,000÷350,000)
|
$2
|
Market price per share
|
$34
|
Price/earnings (P/E) ratio ($34÷$2) |
17
|
The firm is currently considering whether it should use $350,000 (not included in the $$700,000 earnings listed in the financial data) of its earnings to help pay cash dividends of $1.00 per share or to repurchase stock at $34 per share.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Below is select information from two, independent companies. Additional information includes: On January 1, Company A issued a 5-year $1,500,000 bond with at 6% stated rate. Interest is paid semiannually and the bond was sold at 105.5055 to yield a market rate of 4.75%. On January 1, Company B sold $1,500,000 of common stock and paid dividends of $75,000. A. Prepare an income statement for each company (ignore taxes) B. Explain why the net income amounts are different, paying particular attention to the operational performance and financing performance of each company. (Hint: it may be helpful for you to create an amortization table).The following data on the Bond Record Company are available: Earnings available for common stockholders $700,000 Number of shares of common stock outstanding 350,000 Earnings per share ($700,000÷350,000) $2 Market price per share $36 Price/earnings (P/E) ratio ($36÷$2) 18 The firm is currently considering whether it should use $350,000 (not included in the $$700,000 earnings listed in the financial data) of its earnings to help pay cash dividends of $1.00 per share or to repurchase stock at $36 per share. a. Approximately how many shares of stock can the firm repurchase at the $36-per-share price, using the funds that would have gone to pay the cash dividend? b. Calculate the EPS after the repurchase. c. In a perfect market, what is the stock price after the repurchase and what is the P/E ratio? d. Compare the pre- and post-repurchase earnings per share.The following financial data on the Bond Axiata Berhad are available:Earnings available for common stockholders RM1,600,000 Number of shares of common stock outstanding 800,000 Market Price per share RM40.00 The firm is currently considering whether it should use RM800,000 of its earnings to pay cash dividends of RM1 per share or to repurchase stock at RM42 per share.(a) Estimate the Earnings per share before repurchase (EPS)(b) Find the Price/earnings (P/E) ratio(c) Determine how many shares of stock can the firm repurchase at the RM42-per share price, using the funds that would have gone to pay the cash dividend. (d) Calculate the EPS after the repurchase. Explain your calculations.(e) If the stock still sells at 10 times earnings, what will the market price be after the Repurchase. (f) Examine the pre and post-repurchase earnings per share for the Bond Axiata Berhad(g) Compare and contrast the stockholders’ positions under the dividend and repurchase alternatives. Discuss the tax…
- I cant seem to figure out how to determine the earnings per share on common stock?? Help please!! Alternative Financing Plans Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,120,000 $560,000 Issue preferred $1 stock, $10 par — 930,000 Issue common stock, $5 par 1,120,000 750,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $896,000. Enter answers in dollars and cents, rounding to the nearest cent.Crane Limited had $2.39 million of bonds payable outstanding and the unamortized premium for these bonds amounted to $44,600. Each $1,000 bond was convertible into 20 preferred shares. All bonds were then converted into preferred shares. The Contributed Surplus - Conversion Rights account had a balance of $21,500. Assume that the company follows IFRS. a. Assuming that the book value method was used, what entry would be made? Account Titles and Explanation Debit Credit b. Assume that Crane Ltd. offers $9,000 to induce early conversion. What journal entry would be made? Account Titles and Explanation Debit CreditThe table below shows a partial view of Webster Corporation's balancesheet. Webster CorporationBalance Sheet (partial)At December 31, 2021 Long-term debt Notes payable 10% $2,000,00010% convertible bonds payable 2,500,00012% convertible bonds payable 3,000,000Total long-term debt $7,500,000 Stockholders' equity 6% cumulative, convertiblepreferred stock, $100 par, 50,000shares outstanding. 5,000,000 Common stock, $1 par, 600,000shares outstanding. 600,000Additional paid-in capital 2,500,000 Retained earnings 8,500,000Total stockholders' equity $16,600,000 Notes and Assumptions December 31, 20211. Options were granted in December 2020 to purchase 25,000 shares of common stock at $25 per share. The average market price of common stock during 2021 was $35 per share. All options are still outstanding atthe end of 2021 2. Both the 10 percent and 12 percent convertible bonds were issued in2020 at face value. Each convertible bond is convertible into 50 shares of common stock.…
- Frey Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 10% bonds (at face value) $1,600,000 $800,000 Issue preferred $1 stock, $10 par — 1,330,000 Issue common stock, $5 par 1,600,000 1,070,000 Income tax is estimated at 40% of income. Determine the earnings per share on common stock, assuming that income before bond interest and income tax is $480,000. Enter answers in dollars and cents, rounding to two decimal places. Plan 1 $ Earnings per share on common stock Plan 2 $ Earnings per share on common stockA company has the following information in its statement of financial position. Ghs'm Ordinary shares of Ghs5 250 12% unsecured bonds 100 The ordinary shares are currently quoted at Ghs 13 each and the bonds are trading at Ghs720 per Ghs1,000 nominal. The ordinary dividend of Ghs 1.50 has just been paid with an expected growth rate of 10%. Assume corporation tax is currently 16.5%. Calculate the WACC for this companyThe following data were taken from the statement of affairs of RCFE Corp:Bonds payable without security: P800,000Stockholders' equity: 450,000Accounts payable: 350,000Salaries: 50,000Taxes: 75,000Trustee expenses: 45,000Loss on realization: 550,000How much is the total free assets?
- Ulmer Company is considering the following alternative financing plans: Plan 1 Plan 2 Issue 8% bonds at face value $2,000,000 $1,000,000 Issue preferred stock, $15 par — 1,500,000 Issue common stock, $10 par 2,000,000 1,500,000 Income tax is estimated at 35% of income. Dividends of $1 per share were declared and paid on the preferred stock. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $600,000. Round your answers to two decimal places. Earnings per Shareon Common Stock Plan 1 $fill in the blank 1 Plan 2 $fill in the blank 2The information below pertains to Pina Company for 2021. Net income for the year $1,230,000 7% convertible bonds issued at par ($1,000 per bond); each bond is convertible into 30 shares of common stock 1,990,000 7% convertible, cumulative preferred stock, $100 par value; each share is convertible into 3 shares of common stock 4,110,000 Common stock, $10 par value 6,270,000 Tax rate for 2021 20% Average market price of common stock $25 per share There were no changes during 2021 in the number of common shares, preferred shares, or convertible bonds outstanding. There is no treasury stock. The company also has common stock options (granted in a prior year) to purchase 68,200 shares of common stock at $20 per share.(a) Compute basic earnings per share for 2021. (Round answer to 2 decimal places, e.g. $2.55.) Basic earnings per share $ (b) Compute diluted earnings per share for 2021. (Round answer to 2 decimal places, e.g. $2.55.)…Simonelli Co. is considering the following alternative financing plans: Plan 1 Plan 2 Issue 8% bonds (at face value) $5,000,000 4,000,000 Issue preferred $2.00 stock, $20 par — 2,000,000 Issue common stock, $25 par 5,000,000 4,000,000 Income tax is estimated at 40% of income. Determine the earnings per share of common stock, assuming income before bond interest and income tax is $1,000,000.