Question

Sonia Revas owned 700 shares of PIE 6% convertible stock, $60 par value, for which she...

Sonia Revas owned 700 shares of PIE 6% convertible stock, $60 par value, for which she paid $52 a share. She received a dividend for 1 year. She then converted the preferred stock to 500 shares of common stock valued at $95.50 a share.

a. What was the cost to Sonia for her preferred stock?

$

b. How much did Sonia receive as a dividend for her preferred stock?

$

c. What was the value of her common stock at the time of conversion?

$

d. If the common stock paid an annual dividend of $6.00 a share, how much more dividend would she receive annually?

$

e. What was Sonia's percent of increase in annual return as a result of conversion to common stock? Round your answer to two decimal places.

%

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
a) Cost of preferred stock = 700*52 = $        36,400
b) Dividend received on preferred stock = 700*60*6% = $          2,520
c) Value of common stock at the time of conversion = 500*95.50 = $        47,750
d) Annual dividend on common stock = 500*6 = $          3,000
e) % return on conversion to common stock:
i) Return on original investment = 3000/36400 = 8.24%
% increase in annual return = 8.24%-6.00% = 2.24%
ii) Return on value of common stock = 3000/47750 = 6.28%
% increase in annual return = 6.28%-6.00% = 0.28%
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
In 2015 Company A issued for $45 per share, 120,000 shares of $12 par value convertible...
In 2015 Company A issued for $45 per share, 120,000 shares of $12 par value convertible preferred stock. One share of preferred stock can be converted into three shares of Companh A $5 par value common stock at the option of the preferred stockholder. In August 2015 20,000 shares of the preferred stock were converted into common stock. The market value of the common stock at the date of the conversion was $55 per share. What amount should be credited...
In 2020, a company issued for $73 per share, 44,000 shares of $60 par value convertible...
In 2020, a company issued for $73 per share, 44,000 shares of $60 par value convertible preferred stock. One share of preferred stock can be converted into four shares of the company’s $49 par value common stock at the option of the preferred stockholder. In August 2021, all of the preferred stock was converted into common stock. The market value of the common stock at the date of the conversion was $30 per share. What total amount should be recorded...
Hondo inc, issued 1500 shares of 50$ per value convertible preferred stock at 80$ a share....
Hondo inc, issued 1500 shares of 50$ per value convertible preferred stock at 80$ a share. Each preferred share may be converted to 6 shares of 10$ per common stock. The entry to record the conversion of all would include a a.) debit to Preferred stock for $120,000 b.) debit to Additional paid-in Capital on Preferred stock for $90,000 c.) credit to Common stock for $120,000 d.) credit to Additional paid-in capital on common stock for $30,000
K owned 80% of the common stock of S. S had 50,000 shares of $5 par...
K owned 80% of the common stock of S. S had 50,000 shares of $5 par value common stock and 2,000 shares of preferred stock outstanding. Each preferred share received an annual per share dividend of $10.00 and is convertible into four shares of common stock. K did not own any of S’s preferred stock. S also had 600 bonds outstanding, each of which is convertible into ten shares of common stock. S’s annual after-tax interest expense for the bonds...
Makoto Corporation has 9,500 shares of $100 par value, 8%, preferred stock and 45,600 shares of...
Makoto Corporation has 9,500 shares of $100 par value, 8%, preferred stock and 45,600 shares of $10 par value common stock outstanding at December 31, 2020. Answer the questions in each of the following independent situations. (a) If the preferred stock is cumulative and dividends were last paid on the preferred stock on December 31, 2017, what are the dividends in arrears on December 31, 2020, balance sheet? The amount of dividends in arrears on the December 31, 2020 $...
A convertible security (usually convertible bonds or convertible preferred stock) may be tendered at the option...
A convertible security (usually convertible bonds or convertible preferred stock) may be tendered at the option of the holder for shares of common stock in the issuing firm. In other words, the bonds or preferred stock may be converted to common stock. Like warrants, convertibles can lead to diluted earnings, because new shares of common stock are issued. However, unlike warrants, convertibles: Result in new capital for the firm Do not result in new capital for the firm Consider the...
TFlounder Corporation has outstanding 9,300 shares of $100 par value, 6% preferred stock and 62,300 shares...
TFlounder Corporation has outstanding 9,300 shares of $100 par value, 6% preferred stock and 62,300 shares of $10 par value common stock. The preferred stock was issued in January 2020, and no dividends were declared in 2020 or 2021. In 2022, Flounder declares a cash dividend of $328,000. (a) Assume that the preferred are noncumulative. How much dividend will the preferred stockholders receive? Preferred stockholders would receive $enter a dollar amount How much dividend will the common stockholders receive? Common...
On January 1, 2018, Edward Corporation had 12,000 shares of $4 par value common stock and...
On January 1, 2018, Edward Corporation had 12,000 shares of $4 par value common stock and 12,000 shares of 5%, $100 par value convertible preferred stock outstanding. The preferred shares carried a 3-for-1 conversion privilege. On October 1, 2018, all of the preferred shares were converted to common. What number of shares must Edward use in computing basic earnings per share at December 31, 2018? 9,000. 21,000. 48,000. 12,000.
Blue Corporation has 100 shares of common stock issued, of which 50 shares are owned by...
Blue Corporation has 100 shares of common stock issued, of which 50 shares are owned by Carmine Blue, and 50 shares are owned by his wife, Violet Blue. Blue Corporation distributes to each of them 50 shares of a newly-created issue of preferred stock. The preferred shares distributed have an aggregate value of $100,000, and the remaining value of the corporation (that is, the aggregate value of the common stock outstanding) is $100,000. The newly-issued preferred shares are convertible, and...
. Blue Corporation has 100 shares of common stock issued, of which 50 shares are owned...
. Blue Corporation has 100 shares of common stock issued, of which 50 shares are owned by Carmine Blue, and 50 shares are owned by his wife, Violet Blue. Blue Corporation distributes to each of them 50 shares of a newly-created issue of preferred stock. The preferred shares distributed have an aggregate value of $100,000, and the remaining value of the corporation (that is, the aggregate value of the common stock outstanding) is $100,000. The newly-issued preferred shares are convertible,...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT