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Question - As Chief Financial Officer of the ABC Corporation, you are considering a recapitalisation plan that would convert ABC from its current all-equity capital structure to one including substantial financial leverage. ABC now has 1,000,000 ordinary shares outstanding, which are selling for $60 each, and you expect the company's EBIT to be $5,800,000 per year for the foreseeable future. The recapitalisation proposal is to issue $24,000,000 worth of long-term debt at an interest rate of 5.0% and use the proceeds to repurchase 400,000 ordinary shares worth $24,000,000. Assuming there are no market frictions such as corporate or personal income taxes, calculate the earnings per share and the expected return on equity for ABC shareholders under both the current all-equity capital structure and under the recapitalisation plan.
Which of the following is not a limitation of internal control? Bonds that may be exchanged for common stock at the option of the bondholders are called
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Computing asset turnover ratio Shutter Bee Photo reported the following figures on its December 31, 2016, income statement and balance sheet.
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Required - Prepare Tony's journal entries for the initial transaction, recognition of interest each year, and the collection of $33,000 at maturity
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The working capital of the firm, other than bank balance, increased by Rs.1,15,000 during the period. Calculate the profit of the firm for the year
Complete Bea's federal tax return for 2014. Use Form 1040, Schedule A, Schedule B, and Form 4684, to complete this tax return
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