The Common Stock account for Baltimore Corporation on January 1, 2018 was $67,500. On July 1, 2018, Baltimore issued an additional 6,500 shares of common stock. The Common Stock is $5 par. There was neither Preferred Stock nor any Treasury Stock. Paid in Capital Excess to par Common Stock was $20,000 on January 1 and $40,000 on July 2 and net income was $109,000. Use this information to determine for December 31, 2018 the amount of Earnings per Share (rounded to the nearest cent).
Stone Company reported a net income of $2,536 million in 2016. The weighted average number of common shares outstanding during 2016 was 554 million shares. Brook paid $80 million in dividends on preferred stock, which was convertible into 20 million shares of common stock. How much is the basic earnings per share amount for 2016?
A) $4.27
B) $4.42
C) $4.43
D) $4.58
Consider a firm with an EBIT of $10,500,000. The firm finances its assets with $50,000,000 debt (costing 6.5 percent) and 10,000,000 shares of stock selling at $10.00 per share. The firm is considering increasing its debt by $25,000,000, using the proceeds to buy back shares of stock. The firm is in the 40 percent tax bracket. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $10,500,000. Calculate the change in the firm’s EPS from this change in capital structure.
Top Down is a levered firm with assets valued at $300,000, has $75,000 of debt issued at 7% interest, and 5,000 shares of stock outstanding. Suppose that earnings before interest and tax (EBIT) are $11,000 and that corporate profits are subject to a tax rate of 25%.
Which of the following comes closest to the EPS of Top Down?
a. $1.31
b. $1.17
c. $4.20
d. $0
e. $0.86
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