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Ray Of Light [21]
3 years ago
8

Net income $ 209,600 Preferred stock outstanding, 12% cumulative $ 80,000 Market price per share of common stock $ 24.00 Total S

tockholders’ Equity $ 1,240,000 Average number of common shares outstanding 100,000 shares Number of common shares outstanding at end of the accounting period 120,000 shares Dividends per share on common stock $ 0.50 per share.
Based on this information the company's price-earnings ratio:


(a). 5 to 1

(b). 12 to 1

(c). 2 to 1

(d). 10 to 1
Business
1 answer:
Svetllana [295]3 years ago
6 0

Answer:

Option (B) is correct.

Explanation:

Earning available for equity stockholders:

= Net Income - Preferred stock dividend

= $209,600 - ($80,000 × 12%)

= $209,600 - $9,600

= $200,000

Earning Per Share:

= Earning available for equity stockholders ÷ Average number of common shares outstanding

= $200,000 ÷ 100,000

= $2

Price-Earning Ratio = Price of Share ÷ Earning Per Share

                                 = $24 ÷ $2

                                 = 12 Times or 12:1

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If a building has 18,000 square feet of useable space and 2,000 square feet of common area, the rentable/useable factor would be
Nastasia [14]

If a building has 18,000 square feet of useable space and 2,000 square feet of common area, the rentable/useable factor would be 1.111 The amount of a commercial property that the tenant can actually use is measured in "usable square feet," or USF.

The common parts of the buildings, such as the foyers, corridors, stairwells, and public restrooms, are excluded. The USF, however, comprises everything that is enclosed inside the borders of the floor, excluding elevators and staircases, in the instance of tenants who have leased the full level for commercial uses.

The USF of the tenant for a partial floor lease encompasses everything that is particular to their portion of the property. USF is regarded as a significant component since it aids in determining the precise space that the tenant has available for business needs.

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1 year ago
Lego Company has used the FIFO method since it began operations in 2023. Lego changed to the weighted average method in 2026. Th
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Answer:

c. $14,000 increase

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5 0
3 years ago
The balance in Discount on Bonds PayableGroup of answer choicesshould be reported on the balance sheet as an asset because it ha
aksik [14]

Answer: would be subtracted from the related bonds payable on the balance sheet

Explanation:

The discount on the bonds payable is simply a contra liability account which leads to a reduction in the balance that's in the bonds payable account.

The balance in Discount on Bonds Payable would have to be be subtracted from the related bonds payable on the balance sheet.

5 0
3 years ago
Which of the following statements is correct?A.The payment of a cash dividend reduces net income.B.Cash received from issuing co
ioda

Answer:

B.Cash received from issuing common stock to stockholders is reported as a financing activity cash flow within the statement of cash flows.

Explanation:

As when common stock is issued, it provides cash to the company, for any kind of investments, or expense to be made, for running the business.

Financing activities are those which arrange monetary assets generally cash for the company, issue of securities, issue of bonds, borrowings as loans or note payable.

Thus, the statement B is correct.

Further dividends are provided after tax, and are distribution from net income, but not shown under that.

Providing services on account will provide revenue and net income will increase.

Purchasing of any equipment is investing as it will create an asset for the company.

7 0
3 years ago
American​ Exploration, Inc., a natural gas​ producer, is trying to decide whether to revise its target capital structure. Curren
Marat540 [252]

Answer:

a) 9.00 %

b) 7.80 %

c) yes the weight of the debt increases here is more risk in the investment as the debt payment are mandatory and failing to do so result in bankruptcy while the stock can wait to receive dividends if the income statement are good enough

d) 9.00  %

e) The increase in debt may lñead to an increase in return of the stockholders if they consider the stock riskier than before and will raise their return until the WACC equalize at the initial point beforethe trade-off occurs

Explanation:

a)

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.12

Equity weight 0.5

Kd(1-t) = after tax cost of debt = 0.06

Debt Weight = 0.5

WACC = 0.12(0.5) + 0.06(0.5)

WACC 9.00000%

c)

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.12

Equity weight 0.3

Kd(1-t) = after tax cost of debt = 0.06

Debt Weight 0.7

WACC = 0.12(0.3) + 0.06(0.7)

WACC 7.80000%

d)

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

<em>Ke 0.16</em>

Equity weight 0.3

Kd(1-t) = after tax cost of debt = 0.06

Debt Weight 0.7

WACC = 0.16(0.3) + 0.06(0.7)

WACC 9.00000%

3 0
3 years ago
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