Determine earnings per share and share return

Assignment Help Finance Basics

Reference no: EM1356525

Suppose that River Cruises, which currently is all-equity-financed, issues $250,000 of debt and uses the proceeds to repurchase 16,667 shares. Assume that the firm pays no taxes and that debt finance has no impact on its market value. Rework the table given below to show how earnings per share and share return now vary with operating income.

Round earnings per share to three decimal places and return on shares to two decimal places.

Number of shares = 85,000
Price per share = $15
Market value of shares = $1,275,000
Market value of debt = $250,000

State of the Economy
Slump Normal Boom
Operating income $50,000 $100,000 $150,000
Interest $25,000 $ 25,000 $ 25,000

Equity earnings $ $ $
Earnings per share $ $ $
Return on shares % % %

Reference no: EM1356525

Questions Cloud

Determine the pressure that each ski exerts on the snow : The depth of water behind the Hoover Dam in Nevada is 220 m. What is the water pressure at base of this dam? (Neglect the pressure due to the atmosphere.)

Explain what is the organizational culture : Organizational structure and control - What is the organizational structure and control in place in your organization and culture - What is the organizational culture

Production cost flow-measurement : Edison Company manufactures wool blankets and accounts for production costs using process costing. The following information is available regarding its May inventories.

What is her average speed over the entire trip : A dry cell does 7.5. J of work through chemical energy transfer 5 C between terminals of the cell. What is the electric potential between the two terminal.

Determine earnings per share and share return : Assume that River Cruises, which currently is all-equity-financed, issues $250,000 of debt and uses the proceeds to repurchase 16,667 shares. Suppose that the company pays no taxes and that debt finance has no impact on its market value.

Illustrate what would production at a point outside : Illustrate what would production at a point outside the production possibilities curve indicate? What must occur before the economy can attain such a level of production.

Journal entries-stockholders equity : How much total cash did Markus raise through the January 15, 2011, stock issuance? How are these journal entries recorded?

What size of packet result in last bit being transmitted : What size of packet will result in the last bit being transmitted just as the first bit of the packet arrives at the "far end" of the cable?

What is the magnitude of the net force on the block : A 0.14 kg ball is placed in a shallow wedge with an opening angle of 126°. For each contact point between the wedge and the ball, determine the force exerted on the ball. Assume the system is frictionless.

User Account

All Pages