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Calculate the firm annual earnings per share

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A firm has a current capital structure consisting of $200,000 in perpetual debt, borrowed at 9% annual interest rate, and 10,000 shares of common stock. The firm's tax rate is 40 percent on ordinary income. If the annual EBIT is expected to be $100,000, calculate the firm's annual earnings per share (EPS):

[Express your answer in dollars and cents, rounded to the nearest penny (eg. 2.34)]

EPS = $

What is the firm's degree of financial leverage (DFL)? [Round your answer to 2 (two) decimal places (eg. 3.45)] DFL =

Reference no: EM132500845

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