78%(9)7 out of 9 people found this document helpful
This preview shows page 34 - 37 out of 37 pages.
Peyton plans to raise $1,000,000 million of additional capital for the coming yearthat it will enable them to earn an additional $600,000 after tax. What would be tearnings per share if the raise the $1,000,000 by:a) issuing 10,000 share of 10% $100 par value convertible preferred stcan be coverted into 10 shares of Peyton common stock?b) issuing $1,000,000 of 8% convertible bond, each $1,000 bond can b5 shares of Peyton common stock?c) $500,000 of each of the above?Net IncomeLess: Preferred DividendsEarnings Available to Common ShareholdersCommon Shares OutstandingBasic EPS
aIf all preferred shares are converted:Net IncomeAdditional Common SharesCommon Shares Outstanding after conversionEPS if preferred shares convertedPreferred shares are antidilutivebIf all bonds are converted:Net IncomeLess: Preferred DividendsAdd back interest on bonds, net of income taxEarnings Available to Common ShareholdersAdditional Common SharesCommon Shares Outstanding after conversion
r. They anticipatethe impact ontock, where sharebe converted into?HOME