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# Options to Exchange into Common Stock

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Acme Pest Control has sales of \$13,500, cost of goods sold of \$4,000, selling expenses of \$3,500, depreciation of \$2,000, interest expense of \$2,000 and a tax rate of 34%. What is Acme's net income?

Which of the following provides the option to exchange into common stock?
1. paid in kind preferred stock
2. cumulative preferred stock
3. participating preferred stock
4. convertible preferred stock
5. non-cumulative preferred stock

A venture's going concern value is the
1. present value of the expected future cash flows
2. net present value of the current and expect future cash flows
3. future value of the expected cash flows
4. net future value of the current and expected cash flows

#### Solution Preview

1. Acme Pest Control has sales of \$13,500, cost of goods sold of \$4,000, selling expenses of

\$3,500, depreciation of \$2,000, interest expense of \$2,000 and a tax rate of 34%. What is

Acme's net income?

gross income = sales - cost of goods sold = 13,500 - 4,000 = 9500
income before tax = gross income - selling expenses - depreciation - interest ...

#### Solution Summary

The solution discusses options to exchange into common stocks.

\$2.49