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DAR Corporation 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 205,000 shares of stock outstanding. Under Plan II, there would be 155,000 shares of stock outstanding and $2.3 million in debt outstanding. The interest rate on the debt is 6 percent, and there are no taxes. a. If EBIT is $250,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) EPS Plan I $ 1.22 Plan II $ b. If EBIT is $500,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) EPS Plan I $ Plan II $ 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.) Break-even EBIT $.
accrual method C corporation, accrues a bonus of $50,000 to its president (a cash basis taxpayer), who owns 60% of the corporation’s outstanding stock.
Common stock of Fairfax Paint is currently priced at 90.39 dollars per share. The stock is expected to pay annual dividends that are expected to grow by 4.26 percent forever. The next dividend is expected in 1 year and the expected annual return for ..
Book the transaction of the purchase of the building on March 01, 2005 - Book the depreciation of the building for March 2005
Suppose a stock had an initial price of $60 per share, paid a dividend of $.60 per share during the year, and had an ending share price of $53. Compute the percentage total return. (Negative amount should be indicated by a minus sign. Do not round in..
Information about three securities appears below. Assuming interst and dividens are paid annually, calculate the annual holding period return on each security.
If an investment has an average return 10% with a standard deviation of 8%, how much could you lose in any given year?
Assume that in today's market, rrf = 4.25%, the market risk premium is RPM = 4%, and Company XYZ's beta is 1.02.what is Company XYZ's estimated cost of equity?
What is a bank run? Why are banks vulnerable to them? What are the tools available to banks to prevent extreme damage resulting from a bank run? Bank runs illustrate which type of financial risk most strongly (interest rate, credit, sovereign, market..
What is the total percentage return on the investment for the one year period?
Describe the three types of project risk. Which type is theoretically the most relevant? Why?
Pace Co. borrowed $12,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-day year. How much interest would Pace have to pay in a 30-day month?
How do you value a company? Walk me through a discounted cash flow analysis (DCF). What is free-cash flow (FCF)?
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