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As an analyst you have gathered the following information about a company for the year ended

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As an analyst you have gathered the following information about a company for the year ended December 31, 2009;? Net income was $10.5 million.;? Stockholders' equity at December 31, 2009 was $100 million.;? Common stock dividends of $3.5 million were paid.;? 20 million shares of common stock were outstanding on January 1,2009.;? The company issued 6 million new shares of common stock April 1, 2009.;? Outstanding preferred shares;5 million shares, each convertible into 1.5 common shares par value $1 per share, liquidating value $5 per share Annual dividend $4 per share.;Required;a. Compute the company's basic EPS for 2009.;b. Compute the company's diluted EPS for 2009.;c. Compute the company's book value per share at December 31, 2009.;d. Compute the company's book value per share at December 31, 2009 assuming conversion of the preferred shares into common shares.;e. Explain why the diluted calculations (part b and d) provide pre-share amounts that are more suitable for valuation than the amounts calculated in parts a and c.;(Please show all supported calculation to the answer)

 

Paper#24946 | Written in 18-Jul-2015

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