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Inessa05 [86]
3 years ago
12

Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan

I, the company would have 155,000 shares of stock outstanding. Under Plan II, there would be 105,000 shares of stock outstanding and $1.3 million in debt outstanding. The interest rate on the debt is 6 percent, and there are no taxes. a. If EBIT is $200,000, what is the EPS for each plan
Business
1 answer:
s2008m [1.1K]3 years ago
7 0

Answer:

Plan A $1.29

Plan B $1.16

Explanation:

The computation of Earning per share is given below:-

                                                        Plan 1              Plan 2

Earning before interest and tax     $200,000      $200,000

Less: Interest 1,300,000 × 6%                                $78,000

Earning to stock holders A                $200,000     $122,000

Number of stocks B                            155,000        105,000

Earning per share  A ÷ B                     $1.29             $1.16

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Suppose you invest $20,000 by purchasing 200 shares of Abbott Labs (ABT) at $50 per share, 200 shares of Lowes Companies, Inc. (
nikitadnepr [17]

Answer:

Portfolio return = 0.035 or 3.5%

Explanation:

The portfolio return is a function of the weighted average of individual stocks' returns that form up the portfolio. The formula to calculate the portfolio return is as follows,

Portfolio return = wA * rA  +  wB * rB  +  ...  +  wN * rN

Where,

  • w represents the weight of each stock in the portfolio
  • r represents the return of each stock

First we need to calculate the investment of each stock,

Abbott = 200 * 50 = $10000

Lowes = 200 * 30 = $6000

Ball = 100 * 40 = $4000

Portfolio return = (10000 / 20000) * -0.10  +  (6000/20000) * 0.20  +  

(4000/20000) * 0.125

Portfolio return = 0.035 or 3.5%

4 0
3 years ago
Luna wanted to convince the technology department at her company to install new accounting software. Some staff members supporte
Gnom [1K]

Luna realized that the undecided group was her target audience  so she focused most of her effort on them.

<u>Explanation: </u>

A targeted audience is a publication, advertising or other text.   It is a particular group of consumers in the standard target market of marketing and advertising, known as targets or recipients of a specific ad or email.

In the end, it all includes assessing relevance for a target audience profile. You will attract a customer more often if your services and the goods you deliver suit what your audience wants.  

If your customer you want is "everybody," it's very difficult for you to communicate in a deeper way with anyone. The more connected you are to others; the more likely you are to be a protector and a loyal user of your company.

7 0
4 years ago
Follow me for more points!!​
Hatshy [7]
Okayyy thank you so much
4 0
3 years ago
Read 2 more answers
. A major distinction between temporary and permanent differences is a. permanent differences are not representative of acceptab
nadya68 [22]

Answer:

D Temporary differences reverse themselves in subsequent accounting periods, whereas permanent differences do not reverse.

4 0
3 years ago
A firm has sales of $690, EBIT of $300, depreciation of $40, and fixed assets increased by $265. If the firm's tax rate is 40 pe
icang [17]

Answer:

-$45

Explanation:

Given that,

Sales = $690

EBIT = $300

Depreciation = $40

Tax rate = 40%

Fixed assets increased by $265.

Firm's free cash flow:

= Earnings after tax + Depreciation - Capital Expenditure

= [EBIT × (1 - Tax rate)] + $40 - $265

= [$300 × (1 - 0.40)] + $40 - $265

= $180 + $40 - $265

= -$45

Therefore, the firm's free cash flow -$45.

3 0
3 years ago
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