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…

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 converted 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   12,363,732.51

Less: Preferred Dividends         50,000.00

Earnings Available to Common Shareholders   12,313,732.51

Common Shares Outstanding     1,750,000.00

Basic EPS                          7.04

A. If all preferred shares are converted:         

Net Income   12,363,732.51  

Additional Common Shares         ?

Common Shares Outstanding after conversion    ?

EPS if preferred shares converted ?

Preferred shares are antidilutive ?         

B. If all bonds are converted:

Net Income   12,363,732.51

Less: Preferred Dividends         50,000.00

Add back interest on bonds, net of income tax ?

Earnings Available to Common Shareholders ?

Additional Common Shares ?

Common Shares Outstanding after conversion ?

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