Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations. Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets. Earnings per Share: It is a portion of profit that is earned by each common stock. Formula: Earnings per share ( EPS ) = Net income − Preferred dividends Number of common shares outstanding To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

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Answer 1

Question

Chapter 12, Problem 12.1BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

Earnings per share(EPS)=Net income −Preferred dividends Number of common shares outstanding

To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

2.

To determine

Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

3.

To determine

To Describe: The advantages and disadvantages of each plans.

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Effect of Financing on Earnings Per Share Three different plans for financing an $7,100,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the Income tax rate is estimated at 40% of income: Plan 1 Plan 2 Plan 3 10% Bonds Preferred 10% stock, $40 par Common stock, $7.1 par Total Plan L Plan 2 Plan 3 Earnings Per Share on Common Stock 0.79 X 0.92 X $7.100,000 $7,100,000 Required: 1. Determine the samnings per ahara ot.common stack for each plan, assuming that the income before hond interest and income las is $14,200.000 Enter answers in dollars and cents, rounding to two decimal places. 3.72 $3,550,000 3,550,000 $7,100,000 $3,550,000 1,775,000 1,775,000 $7.100,000

Effect of Financing on Earnings Per Share Three different plans for financing an $18,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the income tax rate is estimated at 40% of income: 8% Bonds Preferred 4% stock, $20 par Common stock, $10 par Total Plan 1 Plan 2 Plan 3 $9,000,000 $18,000,000 $9,000,000 9,000,000 4,500,000 4,500,000 $ 18,000,000 $ 18,000,000 $ 18,000,000 Required: 1. Determine the earnings per share of common stock for each plan, assuming that the income before bond interest and income tax is $2,100,000. Enter answers in dollars and cents, rounding to the nearest whole cent. Plan 1 Plan 2 Plan 3 Earnings Per Share on Common Stock 2. Determine the earnings per share of common stock for each plan, assuming that the income before bond interest and income tax is $1,050,000. Enter answers in dollars and cents, rounding to the nearest whole cent. Plan 1 Plan 2 Plan…

Effect of Financing on Earnings Per Share Three different plans for financing an $6,000,000 corporation are under consideration by its organizers. Under each of the following plans, the securities will be issued at their par or face amount, and the income tax rate is estimated at 40% of income: Plan 1 Plan 2 Plan 3 10% Bonds _ _ $3,000,000 Preferred 10% stock, $40 par _ $3,000,000 1,500,000 Common stock, $6 par $6,000,000 3,000,000 1,500,000 Total $ 6,000,000 $ 6,000,000 $ 6,000,000 Required: 1. Determine the earnings per share of common stock for each plan, assuming that the income before bond interest and income tax is $12,000,000. Enter answers in dollars and cents, rounding to two decimal places. Earnings Per Share on Common Stock Plan 1 $ Plan 2 Plan 3 2. Determine the earnings per share of common stock for each plan, assuming that the income before bond interest and income tax is $5,700,000. Enter answers in dollars…

Answer 2

Question

Chapter 12, Problem 12.1BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

Earnings per share(EPS)=Net income −Preferred dividends Number of common shares outstanding

To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

2.

To determine

Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

3.

To determine

To Describe: The advantages and disadvantages of each plans.

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Answer 3

Question

Chapter 12, Problem 12.1BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

Earnings per share(EPS)=Net income −Preferred dividends Number of common shares outstanding

To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

2.

To determine

Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

3.

To determine

To Describe: The advantages and disadvantages of each plans.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 12.1BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

Earnings per share(EPS)=Net income −Preferred dividends Number of common shares outstanding

To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

2.

To determine

Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

3.

To determine

To Describe: The advantages and disadvantages of each plans.

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Answer 5

Chapter 12, Problem 12.1BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

Earnings per share(EPS)=Net income −Preferred dividends Number of common shares outstanding

To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

2.

To determine

Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

3.

To determine

To Describe: The advantages and disadvantages of each plans.

Answer 6

Chapter 12, Problem 12.1BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

Earnings per share(EPS)=Net income −Preferred dividends Number of common shares outstanding

To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

Answer 7

Chapter 12, Problem 12.1BPR

1.

To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Common stock: It refers to a security issued in a form of certificate and implies the right of ownership of an investor over a portion of company’s earnings and assets.

Earnings per Share: It is a portion of profit that is earned by each common stock.

Formula:

Earnings per share(EPS)=Net income −Preferred dividends Number of common shares outstanding

To Determine: Earnings per share of common stock for each plan, if income before bond interest and income tax is $10,000,000.

Answer 8

2.

To determine

Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

Answer 9

2.

To determine

Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

Answer 10

3.

To determine

To Describe: The advantages and disadvantages of each plans.

Answer 11

3.

To determine

To Describe: The advantages and disadvantages of each plans.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 12 - Describe the two distinct obligations incurred by...Ch. 12 - Explain the meaning of each of the following terms...Ch. 12 - Prob. 3DQ Ch. 12 - A corporation issues 26,000,000 of 9% bonds to...Ch. 12 - Prob. 5DQ Ch. 12 - The following data relate to a 2,000,000, 8% bond...Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Fleeson Company needs additional funds to purchase...Ch. 12 - Prob. 10DQ

Solution Summary: The author explains that bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

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Earnings per share of common stock for each plan, if income before bond interest and income tax is $6,000,000.

To Describe: The advantages and disadvantages of each plans.

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Chapter 12 Solutions