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andrew11 [14]
3 years ago
8

Franklin Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Un

der Plan I, the company would have 170,000 shares of stock outstanding. Under Plan II, there would be 120,000 shares of stock outstanding and $2.21 million in debt outstanding. The interest rate on the debt is 7 percent and there are no taxes.
If EBIT is $450,000, what is the EPS for each plan?
Business
1 answer:
Ugo [173]3 years ago
3 0

Answer:

The answer is given below;

Explanation:

Plan  II    EPS=Net Income/Weighted Average shares outstanding

                    =$450,000-(2,210,000*7%)/120,000=$2.46

Plan I    =$450,000/170,000=$2.64

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Use the following data to determine the total amount of working capital.
ValentinkaMS [17]

Answer:

Sheffield Corp.

The amount of working capital

= Current Assets minus Current Liabilities

= $596,300 - $229,000

= $367,300

Explanation:

a) Data and Calculations:

Cash                            $200,000

Accounts receivable      154,000

Inventory                        152,000

Prepaid insurance           90,300

Total current assets                                         $596,300

Stock investments (long-term)        266,000

Land                                                  299,000

Buildings                     $305,000

Less: Accumulated

depreciation                  (55000)    250,000

Goodwill                                            216,000 $1,031,000

Total assets                                                    $1,627,300

Accounts payable             $202,000

Salaries and wages payable <u>27,000 </u>

Current Liabilities             $229,000

Mortgage payable              236,000

Total liabilities                                                 $465,000

Common stock                      $420,300

Retained earnings                   742,000

Total stockholders' equity                            $1,162,300

Total liabilities and stockholders' equity    $1,627,300

The difference between Sheffield Corporation's current assets and the current liabilities is known as the working capital.  It is the excess between these two parameters.

4 0
3 years ago
A company using the perpetual inventory method paid $200 cash to have goods delivered from one of its suppliers. The payment of
Montano1993 [528]

Answer:

An asset exchange transaction which increases the cost of the purchased merchandise.

The firm gives the transportation company money (which is an asset) and since the transportation costs are included in the cost of the merchandise, the firm is paying a fraction of the cost of the asset.

When you are calculating the purchase cost of goods you must include the price of the goods, transportation costs, and any other associated expense like insurance costs and import fees, etc.

Transportation costs are only included in the COGS when the firm acquires the goods, but when the firm sells the goods, any distribution cost is not included under production costs, instead they are included under the sales costs.

5 0
3 years ago
Say that the average worker in Canada has productivity of $33 per hour while the average worker in the United Kingdom has produc
12345 [234]

Answer:

The answer is: Canadian workers will still have a higher productivity, it will be $0.40 per hour higher.

Explanation:

We can elaborate the following productivity table:

Year     Canadian productivity                 British productivity

0                   $33 per hour                        $29 per hour

1                   $33.33 per hour                    $29.87 per hour

2                  $33.66 per hour                    $30.77 per hour

3                  $34 per hour                         $31.69 per hour

4                  $34.34 per hour                    $32.64 per hour

5                  $34.68 per hour                   $33.62 per hour

6                  $35.03 per hour                   $34.63 per hour

At the end of year 6, Canadian workers' productivity will be $35.03 and British workers' productivity will be $34.63 per hour (Canadian workers will be $0.40 more productive).

6 0
3 years ago
Flex Co. just paid total dividends of $1,100,000 and reported additions to retained earnings of $3,300,000. The company has 725,
Ainat [17]

Answer:

$105.60

Explanation:

Given: Total dividend paid= $1100000.

           Retained earning= $3300000.

           Number of outstanding shares= 725000.

           PE ratio= 17.4 times.

First finding earning per share.

Formula; EPS= \frac{(paid\ dividend+ additional\ retained\ earning)}{number\ of\ outstanding\ shares}

⇒ EPS= \frac{(1100000+3300000)}{725000}

⇒ EPS= \frac{4400000}{725000}

∴ EPS= \$ 6.0689 \approx \$ 6.07

Hence, earning per share (EPS)= $6.07.

Now, finding the appropriate stock price.

Price of stock= EPS\times PE

⇒ Price of stock= \$ 6.07\times 17.4

∴ Price of stock= \$ 105.60

Hence, $105.60 would be the appropriate price of stock.

3 0
3 years ago
Export taxes a. may be used when the shipped goods are minerals in short supply, or when the product has been heavily subsidized
coldgirl [10]

Answer:

a. may be used when the shipped goods are minerals in short supply, or when the product has been heavily subsidized by the government.

Explanation:

Export taxes, may be used when the shipped goods are minerals in short supply, or when the product has been heavily subsidized by the government.

4 0
3 years ago
Read 2 more answers
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