Business, 25.11.2019 20:31 evy22

Ebit and leverage money, inc., has no debt outstanding and a total market value of $275,000. earnings before interest and taxes, ebit, are projected to be $21,000 if economic conditions are normal. if there is strong expansion in the economy, then ebit will be 25 percent higher. if there is a recession, then ebit will be 40 percent lower. money is considering a $99,000 debt issue with an 8 percent interest rate. the proceeds will be used to repurchase shares of stock. there are currently 5,000shares outstanding, ignore taxes for this problem.
lower.

a. calculate earnings per share, eps, under each of the three economic? scenarios (normal economic condition, normal economic condition, strong expansion economic conditions)
before any debt? is? issued. also calculate the percentage changes in eps when the economy expands or enters a recession.
b. repeat part (a) assuming that money goes through with recapitalization. what do you observe?

Answers: 3

Show answers

Another question on Business

Business, 21.06.2019 23:00

The impact fiscal multiplier is a. usually estimated to have an average value of 2. b. usually estimated to have an average value of 0. c. the actual immediate multiplier effect of a fiscal policy action after taking into consideration direct fiscal offsets and other short-term crowding out of private spending. d. the multiplier effect of a fiscal policy action that applies to a long-run period after all influences on equilibrium real gdp have been taken into account.

Answers: 3

Answer

Business, 22.06.2019 10:00

Your uncle is considering investing in a new company that will produce high quality stereo speakers. the sales price would be set at 1.5 times the variable cost per unit; the variable cost per unit is estimated to be $75.00; and fixed costs are estimated at $1,200,000. what sales volume would be required to break even, i.e., to have ebit = zero?

Answers: 1

Answer

Business, 22.06.2019 12:50

Two products, qi and vh, emerge from a joint process. product qi has been allocated $34,300 of the total joint costs of $55,000. a total of 2,900 units of product qi are produced from the joint process. product qi can be sold at the split-off point for $11 per unit, or it can be processed further for an additional total cost of $10,900 and then sold for $13 per unit. if product qi is processed further and sold, what would be the financial advantage (disadvantage) for the company compared with sale in its unprocessed form directly after the split-off point?

Answers: 2

Answer

Business, 22.06.2019 12:50

Afirm’s production function is represented by q(m,r) = 4m 3/4r1/3, where q denotes output, m raw materials, and r robots. the firm is currently using 6 units of raw materials and 12 robots. according to the mrts, in order to maintain its output level the firm would need to give up 2 robots if it adds 9 units of raw materials. (a) true (b) false

Answers: 3

Answer

You know the right answer?

Ebit and leverage money, inc., has no debt outstanding and a total market value of $275,000. earning...

Questions