Compute of growth, ebit, stock price and cost of debt

Reference no: EM1315361

Compute of Growth, EBIT, stock price and cost of debt

1. Maxville Motors has annual sales of $15,000. Its variable costs equal 60% of its sales, and its fixed costs equal $1000. If the company's sales increase 10%, what will be the percentage increase in the company's earnings before interest and taxes (EBIT)?

2. In 1958 the average tuition for one year at an Ivy League school was $1,800.Thirty years later, in 1988, the average cost was $13,700. What was the growth in tuition over the 30-year period?

3. Cleveland Corporation has 100,000 shares of common stock outstanding, its net income is $750,000, and its P/E is 8. What is the company's stock price?

4. Claus & co. is planning a zero coupon bond issue that has a par value of $1000 and matures in two years. The bond will be sold today at a price of $826.45. If the firm's marginal tax rate is 40%, what is the annual after-tax cost of debt to the company on this issue?

Reference no: EM1315361

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