Compute earnings available to ordinary shareholders

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Reference no: EM132684713

Assume that ABC Enterprise, with long-term capitalization consisting entirely of 5 million shares wants to raise 2 million for the acquisition of special equipment by:

1. Selling 40, 000 ordinary shares at 50 each
2. Selling bonds at 10% interest
3. Issuing preference shares with an 8% dividend

The present EBIT is 1,000,000 the income tax rate is at 50%, and 100,000 shares of ordinary shares are now outstanding

Problem 1: Compute

(a) Earnings available to ordinary shareholders
(b) EPS, showing a comparative table using the assumptions (items#1-3) above ?

Reference no: EM132684713

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