Sample Company is an aerospace manufacturer located in Summerside, PEI. The company’s income statements and balance sheets for the fiscal years ended August 31, 2003 and 2004 are attached as Excel...

Corporate Finance Assignment:
Question #1
Sample Company is an aerospace manufacturer located in Summerside, PEI. The company’s income statements and balance sheets for the fiscal years ended August 31, 2003 and 2004 are attached as Excel Spreadsheet files.
Required:
Use the statements provided in a separate Excel file, Sample Company.xls, to determine the following. Be sure to show your work.
a) The total dollar investment in assets made during 2004 and the sources of the funds invested.
Solution:
Total dollar investment in assets made during 2004 = Difference in total assets
= $(1,205,900 + 529,700 + 775,100) – (1,163,800 + 44,000 + 461,400)
= $2,510,700 – $1,669,200
= $841,500
b) The amortization expense in 2004 calculated using only the balance sheet.
Solution:
Amortization expense in 2004 = $221,000 – $167,200
= $53,800
c) The stated value of the preferred shares sold in 2004.
Solution:
Value of preferred shares in 2004
$82,400
Value of preferred shares in 2003
$67,400
Difference
$15,000
Number of preferred shares sold in 2004

1,500
Stated value of preferred shares sold in 2004 ($15,000/1,500)
$10
d) The company’s earnings per share (EPS) in 2003 and 2004.
Solution:
2003
Number of preferred shares outstanding
12,000
Preferred dividend paid
$1 per share
Total preferred dividend paid ($1*12,000)
$12,000
Net income
$205,600
Number of common shares outstanding
122,300
EPS = (Net income – Preferred dividend) / Number of common shares outstanding
= ($205,600 - $12,000) / 122,300
= $193,600 / 122,300
= $1.58
2004
Number of preferred shares outstanding (12,000 + 1,500)
13,500
Preferred dividend paid
$1 per share
Total preferred dividend paid ($1*13,500)
$13,500
Net income
$79,100
Number of common shares outstanding (122,300 + 800)
123,100
EPS = (Net income – Preferred dividend) / Number of common shares outstanding
= ($79,100 - $13,500) / 123,100
= $65,600 / 123,100
= $0.53
e) The total dividends paid and dividends per share (DPS) in 2003 and 2004.
Solution:
2003
Preferred stock dividends paid = Dividend per share * Number of preferred shares
= $1 * 12,000
= $12,000
Common stock dividends paid = $36,690
Total dividends paid = $12,000 + $36,690 = $48,690
DPS = Common stock dividends paid / No of shares outstanding
= $36,690 / 122,300
= $0.30
2004
Preferred stock dividends paid = Dividend per share * Number of preferred shares
= $1 * (12,000 + 1,500)
= $13,500
Retained earnings (beginning)
$592,800
Add: Net income
79,100
Less: Retained earnings (ending)
(621,500)
Total dividends paid
$50,400
Common stock dividends paid = Total dividends paid - Preferred dividends paid
= $50,400 - $13,500
= $36,900
DPS = Common...