User Account

All Pages

What is the opening income ebit for both firms what are the

Assignment Help Finance Basics
Reference no: EM13478841

Firm A has $10,000 in assets entirely financed in equity.

Firm B also has $10,000 in assets, but these assets are financed by $5,000 in debt (with a 10% rate of interest) and $5,000 equity.

Both firms sell 10,000 units of output at $2.50 per unit. The variable costs of production are $1, and the fixed production costs are $12,000. (To ease the calculation, assume no income tax.)

a) What is the opening income (EBIT) for both firms?

b) What are the earnings after interest?

c) If sales increase by 10 percent to 11,000 units, by what percentage will each firm's earnings after interest increase?

- Determine the earnings after taxes and compute the percentage increase in these earnings from the answers derived in part (b).

d) Why are the percentage changes different?

Reference no: EM13478841

Questions Cloud

Provide a specific example of a company that took an action : provide a specific example of a company that took an action that might have increased short run profits but had the
The board of the company you work for has seen news : the topic allocated to you for the report assignment isthe board of the company you work for has seen news articles
Quincys boss has limited his investable funds initially to : quincy has recently been hired by an international investment firm that has offices in both london and new york.his
Analyze the walt disney company identify at least six of : analyze the walt disney company. identify at least six of their businesses. using the value chain and the industry
What is the opening income ebit for both firms what are the : firm a has 10000 in assets entirely financed in equity.firm b also has 10000 in assets but these assets are financed by
Using any graphical statistics found on the internet or in : httpmyedison.tesc.edutescdocswebcourseshls-355-olsummariesmod5.htmusing any graphical statistics found on the internet
We will discuss many different theories of psychology : we will discuss many different theories of psychology throughout the course and we will look at biological
Assume that actual cash inflows turn out to be 91000 per : gaines company recently initiated a postaudit program. to motivate employees to take the program seriously gaines
Workspace four alternatives are available to salem to : hedging using foreign currency derivatives scout finch is the chief financial officer cfo of salem manufacturing a

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd