Reference no: EM132793779

Tickle the Ivories current has $4,200,000 in Total Assets. Of that amount, Capital Assets are worth $1,200,000 and current assets are worth $3,000,000. Current assets remain at that level for 9 months. They drop to $2,000,000 for 3 months. The following additional information has been provided.

• Earnings Before Interest and Taxes (EBIT) are $996,000.
• The tax rate is 40 percent.
• Any long-term financing is split evenly (50:50) between long-term debt and equity.
• Short-term interest rates are 4%.
• Long-term interest rates are 6%.

Problem a. Provide the following break-down of the asset mix:

for 9 months for 3 months. Temporary current assets. Permanent current assets. Capital assets. Total Assets

Problem b. Assuming the firm is perfectly hedged, provide the following break-down of the financing mix:

for 9 months for 3 months. Short-term financing. Long-term debt. Shareholder's equity. Total Liab and SHE

Problem c. Calculate expected EPS if the firm is perfectly hedged and has issued 160,000 shares to shareholders. (Round your answer to three decimal places. e.g. 1.234. Don't enter the $ symbol.)