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leonid [27]
2 years ago
5

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 180,000 shares of stock outstanding. Under Plan II, there would be 130,000 shares of stock outstanding and $2.6 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes. a. If EBIT is $575,000, what is the EPS for each plan
Business
1 answer:
asambeis [7]2 years ago
5 0

Answer:

EPS of Plan I = $3.19

EPS of Plan II = $2.82

Explanation:

Under Plan I:

Plan I's Earning per share (EPS) = EBIT ÷ Number of shares = $575,000 ÷ 180,000 = $3.19

Under Plan II:

Interest = $2,600,000 × 8% = $208,000

Earning after Interest = EBIT - Interest = $575,000 - $208,000 = $367,000

Plan II's EPS = $367,000 ÷ 130,000 = $2.82

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When is a lower annual interest rate better than a low annual fee?
34kurt

Explanation:

Lower annual interest in real terms is a relief to customers because it can go across a monthly payment like in a product purchase with a credit card. A low annual fee is just one payment that can be a certain membership of which happens only on an annual basis.

7 0
2 years ago
Why should an entrepreneur do a feasibility study for starting a new venture
nexus9112 [7]

Answer:

Because a feasibility study assists entrepreneurs in understanding the market, the budget needed to launch a company, the liquidity factors of a business endeavor, and the return on investment in the initiative.

4 0
2 years ago
Antonio has a number of employees who report to him. he has been considering how to motivate these employees to higher levels of
AleksandrR [38]
The Maslow hierarchy of needs is an interesting scheme to classify our needs. The most necessary one are at the bottom of the pyramid; Physiological needs like food and water are the most essential ones. Then follows safety, the feeling of love or belonging and having self-esteem, namely thinking that you are worthy. In the end, the highest level of needs is the need for self-actualization, the need to fulfill our potential and to achieve the goals we set out to achieve. While dexter would focus on the bottom of the table, antonio would give more emphasis on the need for self-actualization since according to his opinion this is an important factor enhancing worker priductivity.
6 0
3 years ago
Consumption expenditures $800 Investment expenditures 200 Government purchases 300 Exports 100 Imports 100 Wages 800 Consider th
yan [13]

Answer:

$1,300

Explanation:

The computation of the gross domestic product is shown below:

= Consumption expenditures + investment expenditure + government purchase + export - import

= $800 + $200 + $300 + 100 - $100

= $1,300

The export - import is also known as net exports

We simply added the consumption expenditure, investment expenditure, government purchase and net export

This is the answer, but in the options given, the same is not provided

5 0
2 years ago
Aziz company sells two types of products, Baste and Deluxe . The company provides technical support for users of its products at
klio [65]

Answer:

1.$25

2. Deluxe $13,000

Basic $5,500

Explanation:

1. Calculation to determine the company's cost of technical support per customer service call.

Using this formula

Cost of technical support per customer service call = Expected cost / Expected customer service call

Let plug in the formula

Cost of technical support per customer service call = $150,000 / 10,000

Cost of technical support per customer service call = $25 per customer service call

Therefore the company's cost of technical support per customer service call is $25 per customer service call

2. Calculation to Assign technical support costs to each model using activity based costing

Model Activity Rate (a) Cost driver quantity incurred (b) Allocated Cost (a*b)

Deluxe $25 *520calls = $13,000

Basic $25* 220 calls = $5,500

Therefore the technical support costs assign to each model using activity based costing (ABC) is:

Deluxe $13,000

Basic $5,500

8 0
2 years ago
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