Northern Wood Products is an all-equity firm with 14,000 shares of stock outstanding and a total market value of $585,480. Based on its current capital structure, the firm is expected to have earnings before interest and taxes of $46,800 if the economy is normal, $21,200 if the economy is in a recession, and $56,000 if the economy booms. Ignore taxes. Management is considering issuing $150,000 of debt at a coupon rate of 7 percent. If the firm issues the debt, the proceeds will be used to repurchase stock. What will the earnings per share be if the debt is issued and the economy is in a recession? (Round the number of shares repurchased down to the nearest whole share.)

Which of the following best explains why treasury bonds have an effect on the size of the money supply? a. the amount of treasury bonds in circulation affects both unemployment and inflation. b. the government can spend more money and charge lower taxes by using treasury bonds. c. the federal reserve bank can buy and sell these bonds to raise or lower bank deposits. d. the interest paid on treasury bonds influences the interest rates charged by private banks. 2b2t

The following information is available for jase company: market price per share of common stock $25.00 earnings per share on common stock $1.25 which of the following statements is correct? a. the price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of the year. b. the market price per share and the earnings per share are not statistically related to each other. c. the price-earnings ratio is 5% and a share of common stock was selling for 5% more than the amount of earnings per share at the end of the year. d. the price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of the year.

Alpha industries is considering a project with an initial cost of $8 million. the project will produce cash inflows of $1.49 million per year for 8 years. the project has the same risk as the firm. the firm has a pretax cost of debt of 5.61 percent and a cost of equity of 11.27 percent. the debt–equity ratio is .60 and the tax rate is 35 percent. what is the net present value of the project?