Nedra uses her debit card on a daily basis. The last time she used it was the evening before at a restaurant. This morning, she
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Answer:
Earnings Per Share (EPS) = $1.18
Explanation:
We know,
Earnings Per Share (EPS) =
Here,
Net Income = $2,500,000
Preferred Dividend = Total preferred stock in dollar x cost of preferred stock
Preferred Dividend = $5,000,000 x 8% = $400,000
No. of shares outstanding table is shown below (Weighted):
Shares outstanding + Additional shares - Treasury stock =
[750,000 x stock split] + [300,000 x (8/12) x stock split] - [150,000 x (5/12) x stock split]
= (750,000 x 2) + (200,000 x 2) - (62,500 x 2)
= 1,500,000 + 400,000 - 125,000
= 1,775,000
Now, EPS =
EPS = 1.18 (rounded to 2 decimal places)
<em>Note:</em> 1. As, there is a stock split of 2-for-1, that's why we multiply the stock by 2.
2. Since additional shares are issued on 1st May, therefore, the weight from May to December is for 8 months. Repurchased or Treasury stock should be removed from number of shares.
Answer:
<u>Desing A: </u>23,024,370
<u>Desing B: </u>22,520,274.6
It should purchase desing B as the capitalized cost is lower.
Explanation:
We consider annuity for the overhauls and then, perpetuity to consider this incinerators will last indefinitely.
maintenance cost: 800,000 / 0.05 = 16,000,000
<u>Overhaul: </u>
The company will need to fund 1,250,000 every 5 years. We need to determinate the annuity to obtain this future value:
PV 1,250,000
time 5
rate 0.05
C $ $ 226,218.498
<u>Then at perpetuity:</u>
$ 226,218.498 / 0.05 = 4,524,370
<u>Desing A capitalized cost:</u>
2,500,000 + 16,000,000 + 4,524,370 = 23,024,370
We do the same for Desing B:
investment: 5,750,000
maintenance: 600,000 / 0.05 = 12,000,000
overhaul:
C $ 238,513.725
238,513.73/0.05 = 4,770,274.6
Capitalized cost: 5,750,000 + 12,000,000 + 4,770,274.6 = 22,520,274.6