Solution-What is the expected change in the eps

What is the expected change in the eps

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Reference no: EM132780018

Question: Show how they compute they are from Cost of Capital, Financial Leverage, Capital Structure problems

Problem 1: CPA Co. is preparing to float a new issue of bonds. The bonds will have the following characteristics:

9.5% Coupon rate

10 years Term to maturity

P1,000 Face value

P900.30 Issue price

CPA's tax rate is 30%. The coupon payments are paid semiannually. CPA's cost of debt (k') for this bond issue will be?

Problem 2: PICPA presently sells 400,000 bottles of perfume each year. Each bottle costs P0.85 to produce and sells for PI .00. Fixed costs are P28,000 per year. The firm has annual interest expense of P6,000, preference share dividends of P2,000 per year, and a 30 percent tax rate. What is the expected change in the EPS if sales will increase by 10%?

Reference no: EM132780018

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What is the expected change in the eps

Reference no: EM132780018

Reference no: EM132780018

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