Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1: LaVine Corp. had 1,000,000 shares of common stock outstanding throughout 2021. On October 1, 2021, LaVine issued $15 million of ten year, 5% bonds.

1:

LaVine Corp. had 1,000,000 shares of common stock outstanding throughout 2021.

On October 1, 2021, LaVine issued $15 million of ten year, 5% bonds. Beginning October 1, 2023, bondholders may exercise a conversion privilege to convert the bonds into 375,000 shares of LaVine common stock.

During 2021, LaVine reported $8,000,000 of net income and paid $300,000 in preferred dividends.

LaVine's marginal income tax rate is 25%.

What is LaVine's 2021 diluted earnings per share?

2:

Which of the following transactions will most likely decrease basic earnings per share?

Group of answer choices

The expiration of unexercised stock options

The granting of stock options as employee compensation

The repurchase of common stock for the treasury

The exercise of outstanding stock warrants

3:

Which is a reason a company might issue convertible debt?

Group of answer choices

The conversion feature may allow the company to obtain debt financing at lower rates.

It is a way to issue stock without paying issue costs for a stock issuance.

Convertible bonds are easy to sell even if the company has a poor credit rating.

Convertible bonds will always sell at a premium.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

a musical group and a surgical team are examples of _ _ _ _ teams.

Answered: 1 week ago

Question

Define the goals of persuasive speaking

Answered: 1 week ago