User Account

All Pages

Calculate dfl in a normal economy

Assignment Help Accounting Basics
Reference no: EM133091784

Question - A company has $20,000 in assets with a debt/equity ratio of 2/3. Interest rate on its debt is 8%. The expected EBIT next year is $2,000. The company has 240 shares outstanding. Ignoring taxes:

Required -

(a) Calculate its EPS.

(b) EBIT of $2,000 is expected in a normal economy. In an expansion economy, however, EBIT is expected to be $3,000. This number drops to $1,000 in a recession economy. Calculate the EPS difference between these 2 extreme scenarios (recession and expansion).

(c) Calculate DFL in a normal economy.

Reference no: EM133091784

Questions Cloud

Corporate customers with another channel path : Illustrate how a firm might cover small and medium-sized businesses with one channel strategy and large corporate customers with another channel path.
Describe ideal sales compensation plan : Describe the ideal sales compensation plan for this sales position. How would you pay sellers in this company?
By what amount Megan Company charge its accumulated profit : A related unrealized loss of P100,000. By what amount should Megan Company charge its accumulated profit as a result of the property dividend declaration
Demonstrate an ability to work in groups under time pressure : Propose a project solution that shows due consideration of the physical, social, political, economic, environmental, technological and regulatory contexts
Calculate dfl in a normal economy : A company has $20,000 in assets with a debt/equity ratio of 2/3. Interest rate on its debt is 8%. Calculate DFL in a normal economy
Business management student : Appraise your leadership style and skills as a Business Management student
Integrated health information systems : Outline two (2) potential data security threats for the Integrated Health Information Systems (IHiS) agency which administrates the Information Technology (IT)
What is the carrying value of the machinery : What is the carrying value of the machinery after the journal entry to record the impairment loss has been recorded under? IFRS
How different characterisation methods work : Evaluate experimental data from the testing of heterogeneous catalysts to critically assess performance and Critically assess characterisation data

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd