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Cerrena [4.2K]
3 years ago
6

On June 30, 2019, bonds were issued at par with a face value of $2,000,000 and a 7% stated interest rate. Each bond has a $1,000

face value and is convertible into 30 shares of common stock. The tax rate is 40%. What is the impact of these bonds on the numerator and the denominator in your December 31, 2019 diluted earnings per share calculation if the "if converted" method is used
Business
1 answer:
vagabundo [1.1K]3 years ago
7 0

Answer:

The answer is "$84,000 in the numerator and 60,000 in the denominator".

Explanation:

If securities are transformed into stocks. So, the common stack holder  should be have a larger net revenue, calculation of net revenue

= \$ 2,000,000 \times 7 \% \times (1 - 0.40) \\\\=  \$ 2,000,000 \times \frac{7}{100} \times 0.6\\\\=  \$ 20,000 \times 7 \times \frac{6}{10}\\\\=  \$ 2,000\times 7\times 6\\\\=  \$ 2,000 \times 42\\\\=  \$ 84,000\\

In addition, the loads will also raise the total amount of shares which is calculated as follows:

= \frac{\$ 2,000,000}{ \$ 1,000 \times 30}\\\\= \$ 60,000  \ stocks

Formula:

\ EPS =\frac{\ net \ income}{ \ average \ number \ of \ stocks}

That's why in this question numerator is = $ 84, 000 and denominator = $ 60,000

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corporate social responsibility (CSR)

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3 years ago
How do banks create money? banks create money by ______. a. printing more $20 bills b. making loans c. sending out credit cards
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Banks create cash by using lending extra reserves to buyers and businesses. This, in turn, finally provides greater to money in circulation as dollars are deposited and loaned again.

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Most of the money in our economy is created by using banks, in the form of financial institution deposits – the numbers that show up in your account. Banks create new money each time they make loans. 97% of the money in the financial system today exists as financial institution deposits, at the same time as simply 3% is physical cash.

<h3>How do commercial banks create money?</h3>

Commercial banks make cash through imparting and earning activity from loans such as mortgages, auto loans, business loans, and personal loans. Customer deposits provide banks with the capital to make these loans.

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Now suppose instead that withdraws $400 from her checking account and uses $280 of this money to pay her federal income tax. Aft
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Answer:

$300 has been reduced from the money supply.

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The taxes act as leakage from the circular flow of money. Unless they are spent and injected back as government spending they would be treated as a leakage that has left the circular flow.

Similar effect happens with the savings amount. A saving is a leakage and thus the remaining amount which is $20 after paying for golf clubs and taxes can also be said to have left the circular flow of income and so reducing money supply.

$100 of the original $400 is still left in the flow and money supply as it is still in the checking account after the transaction.

Hope that helps.

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