Question

The financial data below should be used to answer the following two questions.

WRESTLING FEDERATION OF AMERICA, INC.
Capital Structure and Earnings for Year 7
Number of common shares outstanding on December 31, Year 7. . . . . . . . . . . . . . . 2,700,000
Number of common shares outstanding during Year 7 (weighted average) . . . . . . . 2,500,000
Market price per common share on December 31, Year 7 . . . . . . . . . . . . . . . . . . . . . $ 25
Weighted-average market price per share during Year 7 . . . . . . . . . . . . . . . . . . . . . $ 20
Options outstanding during Year 7:
Number of shares issuable on exercise of options . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Exercise price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 15
Convertible bonds outstanding (December 31, Year 3, issue date):
Number of convertible bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Shares of common issuable on conversion (per bond) . . . . . . . . . . . . . . . . . . . . . 10
Coupon rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0%
Proceeds per bond at issue (at par value) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000
Net income for Year 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,500,000
Tax rate for Year 7. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40.0%
1. Basic earnings per share for Year 7 is (choose one of the following):
a. $2.41
c. $2.60
b. $2.57
d. $2.50
2. Diluted earnings per share for Year 7 is (choose one of the following):
a. $2.43
c. $2.54
b. $2.55
d. $2.60



$1.99
Sales0
Views121
Comments0
  • CreatedJanuary 22, 2015
  • Files Included
Post your question
5000