Question
May I have some help on my Assignment please 1. RST Corporation 's EBIT for 2016 amounted to P200,000. The company's capital structure consists of
May I have some help on my Assignment please
1.
RST Corporation 's EBIT for 2016 amounted to P200,000. The company's capital structure consists of 100, 15%, P5,000par value bonds; 1,00012% preferred shares, P100 par value; and 2,000 P50 ordinary shares, P50 par value. Retained Earnings account has a balance of P 125,000 as ofDecember 31, 2016. Forty percent of earnings after interest and taxes(corporate tax rate - 32%) will be retained in the business.
Questions: compute for the following:
a)Interest on bonds payment -
b)Corporate income taxes -
c)Dividends on preferred shares -
d)Dividends on ordinary shares -
e)Balance of Retained Earnings Account as of December 31, 2016
2.
A company issued a 15-year bonds with par value of P1,000 each bond.The coupon rate is 14%. The investors' required rate of return is 10%.Required: Compute for the interest that the company pays annually oneach bond.
3
The dividends of ordinary shares of LMN Corporation have beenexperiencing an annual growth rate of 10%. The present dividend pershare is P 1.20. The investor is requiring a 15% rate of return.Required: Calculate the current value of LMN's 200 ordinary shares undereach of the following independent conditions.
a)Dividends to continue growing at a constant rate of 10%.
b)Dividend growth rate is anticipated to decrease by 1.5% and toremain constant at that level.
c)Dividend growth rate is expected to increase to 12.5% and to remainconstant at that level.P
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