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

Other questions on the subject: Business

Business, 22.06.2019 08:30, justalikri

Most angel investors expect a return on investment of question options: 20% to 25% over 5 years. 15% to 20% over 5 years. 75% over 10 years. 100% over 5 years.

Answers: 1

continue

Business, 22.06.2019 18:50, gucc4836

Retirement investment advisors, inc., has just offered you an annual interest rate of 4.4 percent until you retire in 40 years. you believe that interest rates will increase over the next year and you would be offered 5 percent per year one year from today. if you plan to deposit $13,000 into the account either this year or next year, how much more will you have when you retire if you wait one year to make your deposit?

Answers: 3

continue

Business, 22.06.2019 22:20, Bamaboy8804

Which of the following events could increase the demand for labor? a. an increase in the marginal productivity of workers b. a decrease in the amount of capital available for workers to use c. a decrease in the wage paid to workers d. a decrease in output price

Answers: 1

continue

Business, 23.06.2019 00:30, msc1595

Oimpermeable peaeiremblm: a garment you put on when it's raining. eddepnieent: a sales person. rrgteeaa: to negotiate the price of an article. jcaa: a box where the sales person keeps the money of his/her sales. rbatoa: something inexpensive. zalu: the color of the sky. gfolasdaes (3 words): an object that protects your eyes from the sun.

Answers: 2

continue

Do you know the correct answer?

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