Burns Company Reported $752

question 70

Essay

Burns Company reported $752.4 million in net income in 2018. On January 1, 2018, the company had 400 million shares of common stock outstanding. On March 1, 2018, 24 million new shares of common stock were sold for cash. On June 1, 2018, the company's common stock split 2 for 1. On July 1, 2018, 8 million shares were reacquired as treasury stock.
Required:
Compute Burns' basic earnings per share for the year ended December 31, 2018.

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Definitions:

Unlevered Cost of Capital

The cost of capital for a company that has no debt, reflecting the returns required by equity owners alone.

Annual Coupon

The total interest payments made to bondholders each year, expressed as a percentage of the bond's face value.

Debt

Debt refers to the amount of money borrowed by one party from another, subject to repayment along with interest, used by businesses and governments to finance operations or projects.

Leveraged Capital Structure

A financial structure of a company that involves a significant amount of debt in its capitalization, increasing potential returns to equity holders but also risk.