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schepotkina [342]
3 years ago
12

On January 2, 2009, L Co. issued at par $20,000 of 4% bonds convertible in total into 1,000 shares of L's common stock. No bonds

were converted during 2009. Throughout 2009, L had 1,000 shares of common stock outstanding. L's 2009 net income was $2,000. L's income tax rate is 50%.No potential common shares other than the convertible bonds were outstanding during 2009.L's diluted earnings per share for 2009 would be :A. $1.00.B.$1.20.C. $1.40.D. $2.00.
Business
1 answer:
MrRissso [65]3 years ago
4 0

Answer:

The correct answer is $1.2 per share.

Explanation:

According to the scenario, the computation of the given data are as follows:

Interest expense of Bonds = $20,000 × 4% = $800

Now, Interest expense of Bond, After tax = $800 × ( 1 - 50%) = $800 × 0.50

= $400

So, we can calculate the diluted earning by using following formula:

Diluted Earning = (Net income + Interest expense after tax) ÷ Total outstanding shares outstanding

Where, Total outstanding shares = 1,000 shares + 1,000 shares = 2,000 shares

By putting the value, we get

Diluted earning = ($2000 + $400 ) ÷ 2,000

= $1.2 per share

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QRM, Inc.'s marginal tax rate is 35%. It can issue 10-year bonds with an annual coupon rate of 7% and a par value of $1,000. Aft
puteri [66]

Answer:

4.87%

Explanation:

In this question , we are asked to calculate the appropriate after-tax cost of new debt for the firm to use in capital budgeting analysis.

PMT = 1000*7% = 70 (indicates the amount of interest payment)

Nper = 10 (indicates the period over which interest payments are made)

PV = 966 (indicates the present value)

FV = 1000 (indicates the future/face value)

Rate = ? (indicates the cost of debt)

After Tax Cost of Debt = Rate(Nper,PMT,PV,FV)*(1-Tax Rate) = Rate(10,70,-966,1000)*(1-.35) = 4.87%

6 0
3 years ago
Private solutions to correct for externalities consider the following scenario:________.
Charra [1.4K]

Answer: Charities; coordinating negotiations among all of the parties too costly

Explanation:

From the question, we are told that that a chicken farm uses a nearby stream to dispose of the wastes that is released by its chickens and that the wastes flow downstream into a lake that has become polluted due to the waste matter. The local office of a nonprofit environmental organization then collects enough donations in order to stop the farm's pollution.

The type types of private solutions to the pollution externality which has occured is charity. This is because it is a voluntary activity. The money collected is meant for a specific objective which is to tackle the issue of pollution.

It is also vital to note that sometimes the private solutions to externalities might not work. For example, this occurs when communications barriers or social customs are important enough relative to the potential gains involved that coordinating negotiations among all of the parties too costly.

6 0
3 years ago
An economist makes an assumption that each additional year of education causes future wages to rise by 7 percent. In this​ model
ladessa [460]

Answer:

Wage year 4= $12222.19

Explanation:

Giving the following information:

Each additional year of education causes future wages to rise by 7 percent.

A person with 12 years of education makes ​$21 000 per​ year.

A person with 4 years of education=$?

We will use the present value formula to calculate the wage in year 0. Then with the final value formula calculate the year 4 wage.

PV= FV/[(1+r)^n]

FV=final value at t time

r= rate

n= period of time

PV= 21000/(1,07^12)= $9324. 2511

Final Value= PV*(1+r)^t

Final Value year 4= 9324.2511*(1,07^4)= $12222.19

8 0
3 years ago
How do (inter) governmental organisations, such as the International Energy Agency, project energy use and carbon emissions for
Ainat [17]

The International Energy Agency provides insights into energy use and carbon emissions for the future in the form of exploring different scenarios, which are not actual projections.

<h3 /><h3>What are the goals of the IEA?</h3>

The agency aims to disseminate information and support global efforts to transition from clean and renewable energy use, in order to reduce the impacts of non-renewable energy on the environment and climate.

Therefore, the IEA uses an approach to identify future trends on the sustainable energy transition, and is not really a tool for forecasting the future of global energy.

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5 0
2 years ago
Corporation sold laser pointers for $ 20 each in 2017. Its budgeted selling price was $ 24 per unit. Other information related t
Nonamiya [84]

Solution

                                     Flexible           Actual          Budgeted

Unit sold                      27,800 units   27,800 units     28,100 units

                                       $                      $                           $

Sales price                  $ 24                  $ 20                   $ 24

                                 ----------------------------------------------------------

Total Revenue         667,200          556,000           674,400

Variable costs           55,600             112,000            56,200

                                                                                                                                                                                                          ($2 ×28,100)

                                 ------------------------------------------------------------

Contribution margin  611,600             444.000            618,200

Fixed costs                 52,000               54,000             52,000

                                    ---------------------------------------------------------- Operating Income     559,600         390,000           566,200

                                    ----------------------------------------------------------

Total cost                   107,600          1.66,000              108,200

cost per unit

(Total cost ÷ total units)   3.87                5.97                     3.85

5 0
3 years ago
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