Find the conversion value of the preferred stock

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Reference no: EM132801866

Body and Leg Bhd. Has current after tax earnings of RM3.50 per share with RM1,000,000 common share outstanding. The company plans to issue 50,000 shares of 8 percent, RM50.00 par value convertible preferred stock at par. The convertible which is sold at par can be converted into 2 shares of common stock for each convertible. The current market price for the common shares in RM22.00 per share.

a. Find the conversion value of the preferred stock?

b. Find the convertible's premium over the conversion value?

c. If earning remain the same, find the effect of the issue on earnings per share;

-Before Conversion

-On a fully diluted Basis

D. If earnings after tax increase by RM1.5 million, find the effect of the issue on earnings per share;

-Before conversion

-On a fully basis (100% conversion)

Reference no: EM132801866

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