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Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticipate...

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Accounting

Peyton plans to raise $1,000,000 million of additional capital for the coming year. They anticipate that it will enable them to earn an additional $600,000 after tax. What would be the impact on earnings per share if the raise the $1,000,000 by:

a) issuing 10,000 share of 10% $100 par value convertible preferred stock, where share can be converted into 10 shares of Peyton common stock

b) issuing $1,000,000 of 8% convertible bond, each $1,000 bond can be converted into 5 shares of Peyton common stock

c) $500,000 of each of the above?

Net Income 12,363,732.51

Less: Preferred Dividends 50,000.00

Earnings Available to Common Shareholders 12,313,732.51

Common Shares Outstanding 1,750,000.00

Basic EPS 7.04

A. If all preferred shares are converted:

Net Income 12,363,732.51

Additional Common Shares ?

Common Shares Outstanding after conversion ?

EPS if preferred shares converted ?

Preferred shares are antidilutive ?

B. If all bonds are converted:

Net Income 12,363,732.51

Less: Preferred Dividends 50,000.00

Add back interest on bonds, net of income tax ?

Earnings Available to Common Shareholders ?

Additional Common Shares ?

Common Shares Outstanding after conversion ?

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