Reference no: EM132491836
Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would have 160,000 shares of stock outstanding. Under Plan II, there would be 110,000 shares of stock outstanding and $1.4 million in debt outstanding. The interest rate on the debt is 7 percent, and there are no taxes.
a. If EBIT is $400,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b. If EBIT is $650,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)c.What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
|
Topic-capital market history
: What is the only relevant decision for independent projects if an unlimited capital budget exists?
|
|
How much do you need to invest in each bond
: How much do you need to invest in each bond to immunize your portfolio to ensure you meet your obligation?
|
|
What is the expected return of jockie
: You are analysing Jockie Industries. It has a beta of 1.2. The expected return on a market portfolio is 10%, and risk free rate is 4%.
|
|
Implications for interpreting pe ratios
: How does the forecasting of growth rate on future cash flows affect this approach of valuation? Are there implications for interpreting P/ E ratios?
|
|
Round hammer is comparing two different
: Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the company would
|
|
What is the beta of portfolio
: You invest a portfolio 35% of your capital funds in a large-cap equity fund with a beta of 1.13, 20% in a small-cap equity fund with a beta of 1.62,
|
|
What annual effective rate of interest
: A used car may be purchased for $22,800 cash or $1,800 down and 20 monthly payments of $1,200 each, the first payment to be made in 6 months.
|
|
What is the present value
: What is the present value of $83,146 to be received exactly 34 years from today if the interest rate is 12% p.a.?
|
|
How much more money is required to fund
: How much more money is required to fund an ordinary perpetuity than a 35-year ordinary annuity, if the funds can earn 6% compounded quarterly
|