2 3 In the IPO last year a company sold 8 million shares of

In the IPO last year, a company sold 8 million shares of common stock with a par value of $.05. Recently, the company bought back 200,000 of its shares. The corporate charter authorizes 35 million shares. How many shares are outstanding?

Solution

Requirement 1 Common shares issued in IPO last year 80,00,000 Less: Common Shares Bought back 2,00,000 Outstanding shares 78,00,000 Requirement 2 With a convertible bond, Answer: The bondholder may exchange the bond for common stock Requirement 3 Answer : $43,750 Explanation Interest for 90 days (3,500,000 *5% * 90/360)              43,750