The following information relates to Continental Bhd.: RM'000 Ordinary shares 9% bonds, redeemable in 10 years 7% bonds, redeemable in 6 years Long-term bank loan 20,000 5,000 4,000 1.000 30.000 Question 1 (Continued) Notes: 1. The current ex div market price of the ordinary shares is RM4.50 and Continental Bhd. has just paid a dividend of 45 sen per share. Ordinary share prices and dividends on ordinary shares are both expected to grow by 3% per year for the foresecable future. The current ex interest market price of the 9% bonds is RM105.00 per RM100 bond. The current ex interest market price of the 7% bonds is RM115.00 per RM100 bond and these bonds are convertible into 25 ordinary shares per RM100 bond in 6 years' time. The after-tax interest rate on the long-term bank loan is 5.5% per year. Continental Bhd. pays profit tax at a rate of 30% per year. 2. 3. 4. 5. 6. Required: (i) Calculate the weighted average after-tax cost of capital of Continental Bhd, clearly explaining any assumptions that you have made regarding the convertible bonds. (ii) Critically comment on the impact of using more debts on a company's value.

The following information relates to Continental Bhd.: RM'000 Ordinary shares 9% bonds, redeemable in 10 years 7% bonds, redeemable in 6 years Long-term bank loan 20,000 5,000 4,000 1.000 30.000 Question 1 (Continued) Notes: 1. The current ex div market price of the ordinary shares is RM4.50 and Continental Bhd. has just paid a dividend of 45 sen per share. Ordinary share prices and dividends on ordinary shares are both expected to grow by 3% per year for the foresecable future. The current ex interest market price of the 9% bonds is RM105.00 per RM100 bond. The current ex interest market price of the 7% bonds is RM115.00 per RM100 bond and these bonds are convertible into 25 ordinary shares per RM100 bond in 6 years' time. The after-tax interest rate on the long-term bank loan is 5.5% per year. Continental Bhd. pays profit tax at a rate of 30% per year. 2. 3. 4. 5. 6. Required: (i) Calculate the weighted average after-tax cost of capital of Continental Bhd, clearly explaining any assumptions that you have made regarding the convertible bonds. (ii) Critically comment on the impact of using more debts on a company's value.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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4.Which of the following alternatives represents the correct debt-equity ratio for year 2021?A. 50,22%B. 18,89%C. 30,15%D. 17.19%E. 19,57%
What amount should be reported as basic earnings per share?a. 11.45b. 11.88c. 10.33d. 10.80 What amount should be reported as diluted earnings per share?a. 8.30b. 8.44c. 8.34d. 8.49
Company X has a June 30th year-end. On 1 July 20X5 company X issued £40 million 10%convertible loan stock at par. The terms of conversion (on 1 July 20X9) are that for every £200 ofloan stock, 40 ordinary shares will be issued at the option of loan stockholders. The income tax is25%. Earnings attributable to ordinary shareholders for the year ended 30th June 20X6 were£32.4m and 60 million ordinary shares in issue. You may assume that the convertible loan stock isdilutive.Calculate company X’s diluted EPS for the year ended 30th June 20X6
8. The Gradowski Corporation had net income of $ 150,000 during 19x5, with 10,000 shares of common stock outstanding. It also had 1,000 shares of nonconvertible 5% $ 100 par preferred stock, and $ 25,000 par, 6% bonds convertible into 1,000 shares of common stock after 3 years. Assume a tax rate of 30% and compute basic and diluted EPS. 8a. If the bonds were only outstanding for half the year, how would diluted EPS change? 8b. If this bond has an annual discount amortization of $ 600, how much in interest savings should be added to the numerator?
Blue Company has a complex capital structure with $1,000,000 4% convertible bonds (convertible into 10,000 shares) when the tax rate is 20%. Net income is $304,000 and the weighted average common shares outstanding are equal to 80,000. Blue will report the following earnings per share (rounded to 2 decimal places): O Basic $3.80 and Diluted $-0-. O Basic $3.80 and Diluted $3.80. O Basic $3.80 and Diluted $3.20. O Basic $3.80 and Diluted 3.73.
Here are simplified financial statements for Phone Corporation in a recent year: INCOME STATEMENT(Figures in $ millions) Net sales $ 13,700 Cost of goods sold 4,360 Other expenses 4,047 Depreciation 2,698 Earnings before interest and taxes (EBIT) $ 2,595 Interest expense 715 Income before tax $ 1,880 Taxes (at 35%) 658 Net income $ 1,222 Dividends $ 916 BALANCE SHEET (Figures in $ millions) End of Year Start of Year Assets Cash and marketable securities $ 95 $ 164 Receivables 2,682 2,610 Inventories 217 268 Other current assets 897 962 Total current assets $ 3,891 $ 4,004 Net property, plant, and equipment 20,033 19,975 Other long-term assets 4,276 3,830…
Plz solve !!
MINI Bhd has 12,000 unit of shares of ordinary share outstanding, RM12,000. On 30 Nov. it declared a RM0.30 per share cash dividend on ordinary share to be paid on 30 Dec to shareholders of record on 1 Dec. Required:Prepare journal entry on 30 Nov., 1 Dec, and 30 Dec.
Q2. The following information was extracted from the Statement of Financial Position of Carman Berhad as at 31 December 2018. 7% cumulative preference shares 2,000,000 issued and outstanding of RM100 each ordinary shares 22,000,000 issued of RMI each treasury shares 2,000,000 5% convertible bond are RM10,000,000 worth of bond convertible into 2,000,000 ordinary shares stock options 1,000,000, each to purchase one ordinary share at RM25 per share warrants 2,000,000, each to purchase one ordinary share at RM15 per share Average market share price RM20 Average warrant price RM10 Net profit RM36,000,000 Tax rate is 24% Required: (a) Compute the basic earnings per share. (b) Taking into account dilutive effects above, compute the diluted earnings per share.
Before Riverbed Ltd. engages in the treasury share transactions listed below, its general ledger reflects, among others, the following account balances (par value is £30 per share). Share Premium-Ordinary Share Capital-Ordinary £91,700 £269,400 Retained Earnings (a) Bought 390 treasury shares at £39 per share. (b) Bought 300 treasury shares at £45 per share. (c) Sold 350 treasury shares at £41 per share. (d) Sold 100 treasury shares at £37 per share. £81,900 Record the treasury share transactions (given below) under the cost method of handling treasury shares; use the FIFO method for purchase-sale purposes. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Thunder Yard's total stockholders' Equity is P5,600.000, comprised of the following: • P1,000,000 in 8% cumulative preferred stock consisting of shares of P100 par value • P1,800,000 in Ordinary Shares of P5 par value per share issued at P8 • P1,600,000 in additional Paid in capital P1,200,000 in retained earnings There is a Dividend in Arrears for 2 years 1. Compute for Number of shares of Preferred Stock 2. Compute for Additional Paid In Capital: Preferred Stock 3. Book Value Per Share Ordinary Shares (Round-off Answer to two decimal places)
Please answer asap! UPVOTE will be given! No long explanation needed. GMA Corp. has 500,000 shares authorized and has the following information at the end of its first year of operation: Share Capital, ₱50 par value: ₱754,000 Subscribed Share Capital: ₱343,000 Subscription Receivable: ₱155,000 Share Premium: ₱85,000 How many shares have been issued?

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