Answer:
a-1. We have:
Recession EPS = $1.49
Normal EPS = $2.13
Expansion EPS = $2.45
a-2. We have:
Recession percentage change in EPS = -30.00%
Expansion percentage change in EPS = 15.00%
b-1. We have:
Recession EPS = $1.12
Normal EPS = $1.76
Expansion EPS = $2.08
b-2. We have:
Recession percentage change in EPS = -36.36%
Expansion percentage change in EPS = 18.18%
Explanation:
Note: See the attached excel file for the calculations of the EPS and the percentage changes in EPS.
From the attached excel file, we have:
a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued.
Recession EPS = $1.49
Normal EPS = $2.13
Expansion EPS = $2.45
a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession.
Recession percentage change in EPS = -30.00%
Expansion percentage change in EPS = 15.00%
b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization.
Recession EPS = $1.12
Normal EPS = $1.76
Expansion EPS = $2.08
b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession.
Recession percentage change in EPS = -36.36%
Expansion percentage change in EPS = 18.18%
Answer:
$318,000
Explanation:
The computation of the total assets is shown below:
= Current assets + property, plant, and equipment - difference in amount
= $85,000 + $235,000 - $2,000
= $318,000
The difference of amount is
= Account receivable - collected amount
= $50,000 - $48,000
= $2,000
Since the current asset is already given so we considered the difference in amount to find out the total asset.
Answer:
You can say it through a text, a phone call, an email, or a letter.
Explanation:
Answer: a 0.049, 0.05 and 0.05 or 5%
b 0.039, 0.041 and 0.041 or 4%
Explanation:
Ai discounted yield = [(Face value - purchase price)/Face value] * 360/ maturity
Discount yield =:[(100000 - 96040)/100000] * 360/290
= 0.0396* 1.24
= 0.049
ii. Bond equivalent yield (BEY) = [(Face value - purchase price)/purchase value] * 365/M
BEY= [(100000 - 96040)/96040] * 365/290
BEY = 0.05
iii EAR = [(1+BEY/n)exp n - 1)
EAR = [(1 + 0.05/(365/290)) exp (360/290) - 1]
EAR = [(1 + 0.05/1.26) exp (1.26) - 1
EAR = (1.04) exp (1.26) - 1
EAR = 0.05 or 5%
The same formula are applied for the B part
Discount yield = [(100000-96040)/100000] * 360/365
Discount yield = 0.0396 * 0.986
= 0.039
B ii. BEY = [(100000 - 96040)/96040] * 365/365
BEY = 0.041 × 1
BEY = 0.041
B iii. EAR = [(1 + 0.041/(365/365))exp (365/365) - 1
EAR = (1 + 0.41) - 1
EAR = 0.041 or 4%
Answer:
False
Explanation:
The strike price is used at the time of trading of the options, while on the other hand the option that could be exercised is when take place when there is a delivery of the stock. Basically it means that the stock that can be predicted value and it is set by the seller of the contract. Also it is to be termed as the convertible bonds, but it should be more used for the option trading
Therefore the given statement is false
