They anticipate that it will enable them to earn an additional 600000 after tax

They anticipate that it will enable them to earn an

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Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticipate that it will enable them to earn an additional $600,000 after tax. What would be the impact on earnings per share if the raise the $1,000,000 by: a) issuing 10,000 share of 10% $100 par value convertible preferred stock, where share can be coverted into 10 shares of Peyton common stock? b) issuing $1,000,000 of 8% convertible bond, each $1,000 bond can be converted into? 5 shares of Peyton common stock? c) $500,000 of each of the above? Net Income 12,505,417.87 $ Less: Preferred Dividends 50,000.00 $ Earnings Available to Common Shareholders 12,455,417.87 $ Common Shares Outstanding 1,750,000.00 $ Basic EPS 7.12 a If all preferred shares are converted: Net Income 12,505,417.87 $ Additional Common Shares 100,000.00 $ Common Shares Outstanding after conversion 1,850,000.00 $ EPS if preferred shares converted 6.7597 Preferred shares are antidilutive b If all bonds are converted:
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Net Income 12,505,417.87 $ Less: Preferred Dividends (50,000.00) $ Add back interest on bonds, net of income tax 56,000.00 $ Earnings Available to Common Shareholders 12,511,417.87 $ Additional Common Shares 5,000.00 $ Common Shares Outstanding after conversion 1,755,000.00 $ Common Shares Outstanding after conversion 7.12901303 c If convert $500,000 of each preferred stock and bonds Net Income 12,505,417.87 Less: Preferred Dividends (25,000.00) $ Add back interest on bonds, net of income tax 28,000.00 $ Earnings Available to Common Shareholders 12,508,417.87 $ Additional Common Shares 52,500.00 $ Common Shares Outstanding after Conversions 1,802,500.00 $ EPS if 50% of preferred stock and 50% of bonds convert 6.939482867
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