User Account

All Pages

Calculate earnings per share and eps

Assignment Help Corporate Finance
Reference no: EM13197231

1. EBIT, Taxes, and Leverage.  Kaelea, Inc. has no debt outstanding and a total market value of $90,000.   Earnings before interest and taxes, EBIT, are projected to be $8,000 if the economic conditions are normal. If there is a strong expansion in the economy, then EBIT will be 20 percent higher.  If there is a recession, then EBIT will be 35 percent lower.  Kaelea is considering a $34,000 debt issue with a 6 percent interest rate.  The proceeds will be used to repurchase shares of stock.  There are currently 3,600 shares outstanding (Complete a. & b. assuming Kaelea has a tax rate: 35%).

  1. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued.  Also, calculate the percentage changes in EPS when the economy expands or enters a recession.
  2. Repeat part (a) assuming that Kaelea goes through with recapitalization.  What do you observe?

Reference no: EM13197231

Questions Cloud

Define what key habits are hindering thinking : Explain what key habits are hindering your thinking when looking at the opposing view and defending your own. o Describe what you can do to overcome those habits that are hindering your thinking.
Which is sufficient evidence to proceed with the prosecution : Bob was found with 30 brand new televisions in their original packaging in his apartment. The police thought Bob must have stolen them, but no one had reported the televisions stolen. There was not sufficient evidence of the to proceed with the pr..
Find the height of the building : A building casts a shadow 345 ft long when the angle of elevation of the sun is 48°. Find the height of the building.
What is the total cost of the book : Mustafa buys a book that costs $12.50. If the sales tax is 8%, what is the total cost of the book?
Calculate earnings per share and eps : Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued.  Also, calculate the percentage changes in EPS when the economy expands or enters a recession.
Find all possible values of c : Determine if the function f(x) = 3x + x^2/3 (2 - x)^1/3 satisfies the hypotheses of the MVT on the interval [0, 2]. If it does, find all possible values of c that satisfy the conclusion of the MVT. (MVT is Mean value theorem)
Calculate the contribution per cd unit : Executives of Studio Recordings, Inc. produced the latest compact disc by the Starshine Sisters Band, titled Sunshine /Moonshine . The following cost information pertains to the new CD: CD package and disc (direct material and labor) $1.25/CD
How much will the fence cost : which extends partway into foul territory, create an angle of 105 degrees with home plate. At $32.00 per foot, how much will the fence cost?
Find the meand and standard deviation : The normal daily human potassium requirement is in the range of 2000 to 6000 mg, with larger amounts required during hot summer weather. The amount of potassium in food varies, depending on the food.

Reviews

Write a Review

Corporate Finance Questions & Answers

  Find the operating breakeven point

Given the values and cost data shown in the accompanying table for each of 3 firms, F, G, and H, answer the following questions.

  Explain and discuss stages in a financial crisis

Explain and discuss three stages found within a financial crisis for the United States?

  Solving financial management issues

Assume purchase orders are placed for twice as many shares of a stock as the number of shares offered for sale in a one-hour period. Explain the relationship between the reported trading price just before and just after that one-hour period.

  Sources of revenue received by hospitals

Determine the sources of revenue received by hospitals and what sources are the most stable? What are some of the major public and private revenue sources?

  Define constitutes total risk

Define constitutes total risk, and how is it measured? Of the two (2) components of total risk, discuss and explain which one investor can eliminate?

  What are the ethical issues in this case

Donald Lennon is the president, founder, and majority owner of Wichita Medical Corporation, an emerging medical technology products company.

  Construct time series plot

Use the information to construct time series plot and also Use Excel Solver to make quadratic trend equation to forecast team value.

  Key search words research studies in to obtain an article

Make an analysis of selected article. Start by recognizing and summarizing the hypothesis explained in the article describe whether the hypothesis was rejected or accepted.

  Cost of capital calculations impact on investment decisions

While most financial professionals are very comfortable with the textbook computation, there are a few gray areas worthy of note because of their potential impact on capital budgeting decisions.

  Find the best ways to diversify a portfolio

Discuss the benefits and limitations of portfolio diversification and explain how risk is assessed and what methods are most appropriate for measuring systematic & unsystematic risks.

  Determine the ebit-eps indifference point

Determine the EBIT-EPS indifference point - One piece of information the company desires for its decision analysis is an EBIT-EPS indifference point.

  Buying and selling of contracts

Assume you desire to hedge a $400 million bond portfolio with duration of 4.3% using ten year Treasury note futures with a duration of 6.7%,

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