hmwk_ch13 - PRACTICE EXERCISES PE 13–1A Plan 1 Plan 2...

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Unformatted text preview: PRACTICE EXERCISES PE 13–1A Plan 1 Plan 2 Earnings before bond interest and income tax................ $400,000 $400,000 Bond interest........................................................................ 120,000 1 60,000 3 Balance................................................................................. $280,000 $340,000 Income tax............................................................................ 112,000 2 136,000 4 Net income........................................................................... $168,000 $204,000 Dividends on preferred stock............................................. 140,000 Earnings available for common stock.............................. $168,000 $ 64,000 Number of common shares................................................ /100,000 / 80,000 Earnings per share on common stock.............................. $ 1.68 $ 0.80 1 $1,000,000 × 12% 2 $280,000 × 40% 3 $500,000 × 12% 4 $340,000 × 40% PE 13–1B Plan 1 Plan 2 Earnings before bond interest and income tax................ $ 500,000 $ 500,000 Bond interest........................................................................ 270,000 1 216,000 3 Balance ................................................................................ $ 230,000 $ 284,000 Income tax............................................................................ 92,000 2 113,600 4 Net income........................................................................... $ 138,000 $ 170,400 Dividends on preferred stock............................................. 120,000 Earnings available for common stock.............................. $ 138,000 $ 50,400 Number of common shares................................................ / 150,000 / 120,000 Earnings per share on common stock.............................. $ 0.92 $ 0.42 1 $3,000,000 × 9% 2 $230,000 × 40% 3 $2,400,000 × 9% 4 $284,000 × 40% PE 13–2A $3,558.45. [$7,000 × 0.50835 (Present value of $1 for 10 periods at 7%)] PE 13–2B...
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This note was uploaded on 04/27/2008 for the course ACG 2021 taught by Professor Cobb during the Spring '08 term at Saint Petersburg.

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hmwk_ch13 - PRACTICE EXERCISES PE 13–1A Plan 1 Plan 2...

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