a. Asubsidiary of J and J had outstanding, at the end of the year,10,000 shares of common stock outstanding and 5,000 shares ofnon-cumulative/non-participating preferred stock. J & J wantsto issue cash dividends totaling $80,000. Calculate how much goesto preferred stock holders and common stock holders.
Preferred Stock Dividend
31,250.00
(500000*10%*7.5/12)
Common Stock Dividend
48,750.00
Total Cash Dividend
80,000.00
Problem 3
Assume that the above subsidiary reported net income of $105,000and had 1200 convertible bonds payable outstanding. In addition,the subsidiary had 5,000 shares of cumulative 8%, $100 par valuepreferred stock. The bonds pay 2% interest annually and mature in2020. Further assume that the bonds are convertible at the rate of100 shares of $10 par value stock per bond. The stockâs marketvalue is $12 per share. Calculate diluted earnings per share. Themarginal tax rate is 30%
a. Asubsidiary of J and J had outstanding, at the end of the year,10,000 shares of common stock outstanding and 5,000 shares ofnon-cumulative/non-participating preferred stock. J & J wantsto issue cash dividends totaling $80,000. Calculate how much goesto preferred stock holders and common stock holders.
Preferred Stock Dividend | 31,250.00 | (500000*10%*7.5/12) | |
Common Stock Dividend | 48,750.00 | ||
Total Cash Dividend | 80,000.00 | ||
Problem 3
Assume that the above subsidiary reported net income of $105,000and had 1200 convertible bonds payable outstanding. In addition,the subsidiary had 5,000 shares of cumulative 8%, $100 par valuepreferred stock. The bonds pay 2% interest annually and mature in2020. Further assume that the bonds are convertible at the rate of100 shares of $10 par value stock per bond. The stockâs marketvalue is $12 per share. Calculate diluted earnings per share. Themarginal tax rate is 30%
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