Calculation of operating income ebit and dividend per

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Calculation of operating income, EBIT and dividend per share.

1. Companies generate income from their "regular" operations and from things like interest on securities they hold, which is called non-operating income. Mitel Metals recently reported $9,000 of sales, $6,000 of operating costs other than depreciation, and $1,500 of depreciation. The company had no amortization charges and no non-operating income. It had issued $4,000 of bonds that carry a 7% interest rate, and its federal-plus-state income tax rate was 40%. What was the firm's operating income, or EBIT?

a. $1,100

b. $1,200

c. $1,300

d. $1,400

e. $1,500

2. Collins Inc's latest net income was $1 million, and it had 200,000 shares outstanding. The company wants to pay out 40% of its income. What dividend per share should the company declare?

a. $1.60

b. $1.70

c. $1.80

d. $1.90

e. $2.00

Reference no: EM13356781

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