On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative
preferred stock issued and outstanding. On March 1, 2018, Berclair purchased 24 million shares of its common stock as treasury stock. Berclair issued a 5% common stock dividend on July 1, 2018. Four million treasury shares were sold on October 1. Net income for the year ended December 31, 2018, was $150 million. The income tax rate is 40%. Also outstanding at December 31 were incentive stock options granted to key executives on September 13, 2013. The options are exercisable as of September 13, 2017, for 30 million common shares at an exercise price of $56 per share. During 2018, the market price of the common shares averaged $70 per share. In 2014, $62.5 million of 8% bonds, convertible into 6 million common shares, were issued at face value. Required: Compute Berclair’s basic and diluted earnings per share for the year ended December 31, 2018. (Enter your answers in millions (i.e., 10,000,000 should be entered as 10)
1 answer:
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Answer:
310,588.5
Explanation:
As is not said we can assume the 2,100 each year to be paid at the end of the year, and the 7% to be used as a compunded anually rate. So let´s first think just about the 2,100, as they are regulary payments, they can be seen as an anuity inmediate, the formula is as follows:
where sn is the future value of the regular payments, i is the interest rate and n is the number of payments and p is the amount of regular payment so in this particular case we have:
=198,367.65
So now let´s think on the gift of 29,000 as it is paid on 10 years, there will remain 20 years with an investment rate of 7% compounded anually. so there we have the classic formula of future value
where FV is the future value, PV is the present value, i is the interest rate per period, and n is the number of periods. Again in this particular case we have:
so the total amont will be:
total=198,367.65+112,220.85
total=310,588.5