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yan [13]
3 years ago
5

Lerner Co. had 200000 shares of common stock, 20000 shares of convertible preferred stock, and $600000 of 10% convertible bonds

outstanding during 2021. The preferred stock is convertible into 40000 shares of common stock. During 2021, Lerner paid dividends of $0.55 per share on the common stock and $1.80 per share on the preferred stock. Each $1,000 bond is convertible into 45 shares of common stock. The net income for 2021 was $360000 and the income tax rate was 30%. Basic earnings per share for 2021 is (rounded to the nearest penny)
Business
2 answers:
Finger [1]3 years ago
8 0

Answer:  

Basic EPS is $1.62

Explanation:

Basic earnings per share=(Net income-preferred dividends)/weighted average number of shares

net income is $360,000

preferred dividends=$1.80*20,000=$36000

Weighted average number of common stock is 200,000

Basic Earnings Per Share=($360,000-$36000)/200,000

=$1.62  

From the computation the basic EPS year 2021 is $1.62

This implies that each share had earnings of $1.62 during year from which $0.55 was paid out as dividends and the balance $1.07 was reinvested in the business for further growth

mestny [16]3 years ago
7 0

Answer:

Basic EPS=$1.08                

Explanation:

Basic EPS= Net income after tax-preferred shares' dividend/Weighted average of outstanding shares

Net income after tax=$360,000*.7=$252,000

Dividend to preference shareholders=20,000*1.8=$36,000

Weighted average shares outstanding=200,000

Basic EPS=($252,000-$36,000)/200,000

Basic EPS=$1.08

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2 years ago
When a third party receives an unwarranted cost, it is called a...
Nezavi [6.7K]

Answer:

negative externality

Explanation:

A product can be defined as any physical object or material that typically satisfy and meets the demands, needs or wants of customers. Some examples of a product are mobile phones, television, microphone, microwave oven, bread, pencil, freezer, beverages, soft drinks etc.

In Economics, a positive externality arises when the production or consumption of a finished product or service has a significant impact or benefits to a third party that isn't directly involved in the transaction.

On the other hand, a negative externality arises when the production or consumption of a finished product or service has a negative effect and/or impact (cost) on a third party.

This ultimately implies that, a negative externality is generated when a third party receives or bears an unwarranted cost. Some examples of a negative externality is John declining to buy his favorite candy due to an increase in its price, a manufacturing plant that causes noise and pollution to the people living around where it is situated, etc.

4 0
3 years ago
Ortfolio Expected Return Beta
soldi70 [24.7K]

Question (in proper order)

If the simple CAPM is valid and all portfolios are priced correctly, which of the situations below is possible? Consider each situation independently, and assume the risk-free rate is 5%.

A)  

Portfolio            Expected  Return Beta

A                          11​ %                                 1.1​  

Market                 11​ %                                 1.0​

B)  

Portfolio          Expected  Return          Standard Deviation

A           14​ %                 11​ %

Market            9​ %                             19​ %

C)  

Portfolio          Expected Return          Beta

A                      14​ %                            1.1​  

Market             9​ %                            1.0​

D)

Portfolio          Expected  Return          Beta

A                      17.6​ %                             2.1​  

Market             11​ %                             1.0

​Option A

Option B

Option C

Option D

Answer and Explanation:

A) As Per CAPM

Expected Return = Risk free rate + Beta × (Market Return - Risk free Rate)

                            = 5%                   + 1.1    ×  (11%                   - 5%)

                            = 11.60%

(Portfolio is not correctly Priced)

B) Standard Deviation alone cannot determine expected return using CAPM

C) As Per CAPM

Expected Return = Risk free rate + Beta × (Market Return - Risk free Rate)        

                            = 5% + 1.1 × (9% - 5%) = 9.40%

(Portfolio is not correctly Priced)

D) As Per CAPM

Expected Return = Risk free rate + Beta × (Market Return - Risk free Rate)

                            = 5% + 2.1 × (11% - 5%) = 17.60%

Required Rate and Expected Return of Portfolio are Same

(Portfolio is correctly Priced)

Option D is correct option

7 0
3 years ago
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morpeh [17]

Answer:

c) A Special Warranty Deed

Explanation:

First, the multiple options for the question

a)A quitclaim deed

b) A sheriff's deed

c) A special warranty deed

d) A partition deed

Warranty deeds are documents used mostly in the sales of real estate properties either commercial or residential. It is most useful when the transfer or sale of property is done between parties that are not familiar with one another. The two types of warranty deeds are General Warranty Deed  and the Special Warranty Deed. The coverage guaranteed is the difference between the two types of warranty deeds.

In using a  special warranty deed, the seller who is also the grantor of the warrant, only guarantees against issues, damages and defects that occur during the grantor's physical ownership of the property. This type of warrant does not make assurances or guarantees for defects in title on the proprty and defects that occured before ownership of the property. It is also called grant deed or covenant deed.

General Warranty on the other hand covers all issues, damages and defects on the sold property.

Since, the person only wishes to convey all interests without warrants on liens, encumrances and any other title defect, the deed is the Special Warranty Deed

8 0
3 years ago
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