.- Early in 2010, Samsung was formed with authorization to issue 10,000 shares of €2 par value common stock and 20,000 s

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.- Early in 2010, Samsung was formed with authorization to issue
10,000 shares of €2 par value common stock and 20,000 shares of €80
par value cumulative preferred stock.
During 2010, all the preferred stock was issued at par, and
6,000 shares of common stock were sold for €20 per share. The
preferred stock is entitled to a dividend equal to 12 percent of
its par value before any dividends are paid on the common
stock.
During its first five years of business (2010 through 2014), the
company earned income totaling €,3,000,000 and paid dividends of
0.5€s per share each year on the common stock outstanding.
On January 1, 2012, the company purchased 1,000 shares of its
own common stock in the open market for €40,000. On January 2,
2014, it reissued 600 shares of this treasury stock for €30,000.
The remaining 400 shares were still held in treasury at December
31, 2014.
1.- Prepare the stockholders’ equity
section of the balance sheet at December 31, 2014. Include a
supporting schedule showing (1) your computation of any paid-in
capital on treasury stock and (2) retained earnings at the balance
sheet date.(36 points)
2.-As of December 31, 2014, compute the
company’s book value per share of common stock.(6 points)
3.- In the event that you, acting as
CFO of a Public listed company want to make an investment explain
the difference between choosing:
a)Bank loan with covenants
b) Issuing Bonds
c) Issuing shares
d) Issuing preferred Stock.
What would be the impact on Net
income, EPS, PE ratio, Debt to Equity, Debt to Assets.
(16 points)
4.-What is the difference between
bonds issued at discount, par or premium. (5 points)