An investor is considering investing in Dunham Event Associates Inc. In 2010, the firm’s income statement showed a net i...
An investor is considering investing in Dunham Event Associates Inc. In 2010, the firm’s income statement showed a net income of $5.20 million and its balance sheet demonstrated common stock dividend value of $2 million and preferred stock dividend value of $1 million. Dunham averaged 15 million common stock outstanding shares in financial markets. This investor wishes to compare these two investment alternatives. Thus, based on the information given, what is the difference between EPS with common stock and EPS with preferred stock?
Homework Answers
| Earning per share(EPS) | = | Net Income available for shareholders | ||
| Weighted average no. of common shares | ||||
| Case 1:With common stock | ||||
| Net Income | $52,00,000 | |||
| Less:Dividend for Preferred stock | $10,00,000 | |||
| Net Income available for common shareholders | $42,00,000 | |||
| Weighted average no. of common shares | 1,50,00,000 | |||
| EPS($4,200,000 / 15,000,000) | $0.28 | |||
| Case2:With Preferred stock | ||||
| Net Income available for common and preferred shareholders | $52,00,000 | |||
| Weighted average no. of common shares | 1,50,00,000 | |||
| EPS($4,200,000 / 15,000,000) | $0.35 | |||
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An investor is considering investing in Dunham Event Associates Inc. In 2010, the firm’s income statement showed a net i...
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An investor is considering investing in Dunham Event Associates Inc. In 2010, the firm’s income statement showed a net income of $5.20 million and its balance sheet demonstrated a common stock dividend value of $2 million and a preferred stock dividend value of $1 million. Dunham averaged 15 million common stock outstanding shares in financial markets. This investor wishes to compare these two investment alternatives. Thus, based on the information given, what is the difference between EPS with common stock...
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