H Corporation's capital structure is asfollows:Bonds payable, 10 years, 10%P1,000,00010% Preferred stocks, P200 par value,10,000 shares issued and outstanding2,000,000Common stocks, P50 per share,30,000 shares issued andoutstanding1,500,000Retainedearnings500,000TotalP5,000,000The company earnings per common share(EPS) is P12. The common shares' currentmarket price is P60 while that of preferredshares is P250. The income tax rate is 30%.1. What is the cost of debt?2. What is the cost of common stock?3. What is the weighted average cost of capital?

Cost of capital refers to the discount rate used to determine the present value of the estimated…

Answered: H Corporation's capital structure is as…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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H Corporation’s capital structure is as follows: Bonds payable, 10 years, 10% P1,000,00010% Preferred stocks, P200 par value, 10,000 shares issued and outstanding 2,000,000Common stocks, P50 per share, 30,000 shares issued and outstanding 1,500,000Retained earnings 500,000 Total P5,000,000The company earnings per common share (EPS) is P12. The common shares’ current market price is P60 while that of preferred shares is P250. The income tax rate is 30%.1. The cost of debt is? 2. The cost of common stocks is? 3. What is the weighted average cost of capital?
C. Utter Space Corp. had the following securities outstanding at the beginning of the ourrent year: 10% convertible bonds payable, eachP1,000 bond convertible into 10 ordinary shares or a total of P40,000 ordinary shares. Ordinary shares capital, P100 par, 250,000 shares Authorized, 100,000 sharesissued 4,000,000 10,000,000 5,000,000 30% Net Income Incometaxrate Required: Compute for Basic Earnings Per Share and Diluted Earnings Per Share
The following capital accounts are shown in the statement of financial position of George Corporation: Ordinary shares, 10,000 shares, par value P100 Premium on ordinary shares Share premium – treasury shares Accumulated profits and losses Treasury shares, 2,000 shares at cost P1,000,000 20,000 30,000 750,000 250,000 The entire 2,000 treasury shares were sold for P200,000. What would be the balance of the accumulated profits and losses account after this sale?
Ute Company reported the following capital structure during the current year: 5% cumulative preference share capital, par value P100, 25,000 shares issued and outstanding Ordinary Share capital, par value P35, 100,000 shares issued and outstanding The entity reported net income of P5,000,000 for the current year. The entity paid P125,000 in preference dividends in the current year. 7. What amount should be reported as the basic earnings per share? a. 48.75 b. 50.00 c. 51.25 2,500,000 3,500,000
The following information was taken from the books and records of Ivanhoe, Inc.: 1. Net Income $409,200 2. Capital structure: a. Convertible 6% bonds. Each of the 280, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. 280,000 b. $10 par common stock, 220,000 shares issued and outstanding during the entire year. 2,200,000 c. Stock warrants outstanding to buy 14,560 shares of common stock at $20 per share. 3. Other information: a. Bonds converted during the year None b. Income tax rate 30% c. Convertible debt was outstanding the entire year d. Average market price per share of common stock during the year $32 e. Warrants were outstanding the entire year f. Warrants exercised during the year None Compute basic earnings per share. (Round answer to 2 decimal places, e.g. 52.75.) Basic earnings per share $ Compute diluted earnings per share. (Round answers to 2 decimal places, e.g. 52.75.) Security EPS Common Stock $ Warrants $…
At year end, National Corporation balance sheet showed total assets of P70,000,000, total liabilities of P35,000,000, total preferred share capital of P10,000,000, and 1,000,000 shares of common stock outstanding. Based on this information, National Corporation's book value per share of common stock is ________. Format: 11
The following information was taken from the books and records of Luxemburg, Inc.: 1. Net income $ 480,000 2. Capital structure: a. 300 shares of convertible 6% bonds. Each of the $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. $300,000 b. $10 par common stock, 200,000 shares issued and outstanding during the entire year. $2,000,000 c. Stock warrants outstanding to buy 16,000 shares of common stock at $20 per share. d. 200,000 shares of 6% nonconvertible preferred stock, $5 par value. $1,000,000 3. Other information: a. Bonds converted during the year: None b. Income tax rate: 30% c. Convertible debt was outstanding the entire year d. Average market price per share of common stock during the year: $32 e. Warrants were outstanding the entire year None f. Warrants exercised during the year: Reauired:
The following information was taken from the books and records of Cullumber, Inc.: 1. Net Income $391,400 2. Capital structure: a. Convertible 6% bonds. Each of the 290, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. 290,000 b. $10 par common stock, 190,000 shares issued and outstanding during the entire year. 1,900,000 c. Stock warrants outstanding to buy 15,040 shares of common stock at $20 per share. 3. Other information: a. Bonds converted during the year None b. Income tax rate 30% c. Convertible debt was outstanding the entire year d. Average market price per share of common stock during the year $32 e. Warrants were outstanding the entire year f. Warrants exercised during the year Compute diluted earnings per share
The H2 Corp has the following classes of share capital outstanding as of Dec 31, 2021.Ordinary share capital, P20 par value, 20,000 shares outstandingPreference share capital, 5% P100 par value, cumulative and partially participating 4%, 2,000 shares outstandingNo dividends were paid on Preference shares for two years. On Dec 31, 2021 a total Cash dividend of P180,000 was declared.How much dividends will be received by the preference shares holders? A.73,333 B.38,222 C.38,000 D.120,000
The following information was taken from the books and records of Wildhorse, Inc.: 1. Net Income $488,400 2. Capital structure: a. Convertible 6% bonds. Each of the 290, $1,000 bonds is convertible into 50 shares of common stock at the present date and for the next 10 years. 290,000 b. $10 par common stock, 220,000 shares issued and outstanding during the entire year. 2,200,000 c. Stock warrants outstanding to buy 15,520 shares of common stock at $20 per share. 3. Other information: a. Bonds converted during the year None b. Income tax rate 30% c. Convertible debt was outstanding the entire year d. Average market price per share of common stock during the year $32 e. Warrants were outstanding the entire year f. Warrants exercised during the year None
Following is the Balance Sheet of Redeemable Limited: 24 I. Equity and Liabilities (1) Shareholders' Funds (a) Paid-up Share Capital : 10% 1,000 Redeemable Preference Shares of $ 100 each fully called up Less : Calls in Arrears on 50 Shares @ $ 20 each 1,00,000 1,000 99,000 5,00,000 50,000 Equity Shares of $10 each (b) Reserves and Surplus : Development Rebate Reserve General Reserve 50,000 1,00,000 1,50,000 1,51,000 (2) Other Liabilities Total Equity and Liabilities 9,00,000 II. Assets Other Assets 8,10,000 90,000 Bank Total Assets 9,00,000 The Redeemaule Preference Shares were redeemed on the following basis : (1) Further 4,500 equity shares were issued at a premium of 10 per cent; (2) of the 50 Preference Shares, holders for 40 shares paid the call before the date of redemption. The balance 10 shares were forfeited for non-payment of calls before redemption. The forfeited shares were reissued as fully paid on receipt of $500 before redemption; (3) Preference shares were redeemed at…
Farmer Company had the following share capital as of December 31, 2021: Bonds payable, P1,000 face value, 5,000 bonds, 6% interest rate, each bonds are convertible into twenty ordinary shares Ordinary share capital, P50 par, 500,000 shares authorized, 200,000 shares outstanding 5,000,000 10,000,000 The entity reported a net income of P5,400,000 for the current year. The income tax rate is 30%. Compute for the basic and diluted earnings per share based on the following independent scenarios: A. The bonds were issued in the prior year at par value. BEPS = DEPS %3D B. The bonds were issued on July 1, 2021. BEPS = DEPS =

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