The Rambutan Fruit Company needs to raise $10 million by means of a debt issue. It has
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Common stock (par $5)………………………………. $ 5,000,000
Additional paid-in capital…………………………….. 10,000,000
Retained earnings…………………………………….. 15,000,000
Total capitalization……………………………………$30,000,000
a. Show the capitalization from each alternative, both before and after conversion or exercise (a total of four different capitalizations).
b. Compute earnings per share currently and under each of the four capitalization determined in Part (a).
c. If the price of Rambutan stock went to $75, determine the theoretical value of each warrant issued under the second alternative.
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Related Book For
Fundamentals Of Financial Management
ISBN: 9780273713630
13th Revised Edition
Authors: James Van Horne, John Wachowicz
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