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Snezhnost [94]
3 years ago
14

Katlin Markets is debating between a levered and an unlevered capital structure. The all-equity capital structure would consist

of 75,000 shares of stock. The debt and equity option would consist of 40,000 shares of stock plus $320,000 of debt with an interest rate of 6.25 percent. What is the break-even level of earnings before interest and taxes between these two options? Ignore taxes.a.$46,333.33b.$44,140.71c.$42,208.15d.$49,666.67e.$42,857.14
Business
1 answer:
Goshia [24]3 years ago
8 0

Answer:

e. $42,857.14

Explanation:

The computation of the break-even level of earnings before interest and taxes between these two options is shown below:

(EBIT) ÷ (Number of shares) = (EBIT - Interest) ÷ Number of shares  

(EBIT) ÷ (75,000 shares) = (EBIT - $20,000) ÷$40,000

40,000 × EBIT = 75,000 × EBIT - $1,500,000,000

35,000 × EBIT = $1,500,000,000

After solving this,  

The EBIT would be $42,857.14

The interest expense

= $320,000 × 6.25%

= $20,000

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Answer:

by the government's ability to control the supply of money and therefore to keep its value relatively stable.

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4 0
3 years ago
: An item has a price tag of $35 and another tag that says, "20% Off." What is the sale price?
Lynna [10]
So 20 percent of 35 is 7.

Look at it this way:
20%
20*5=100

35 divided by 5 is 7.

So the sale price we would take7 from 35 to get 28.00 which is your answer.

Ps don't do it the way i did because i already knew the answer,and the way i worked it out worked this one time but there are no gaurentees for the next.

You must be wondering why we subtracted that 7 from 35 and why 7 isn't the full answer. Well, 7 was the factor, basically every 20 percent you would subtract 7. So if it were 40% off it would be 14. Or 60 percent would be 21. You subtract that number from the original price to get the sale which in this case is 28.00

Your answer: 28.00

Hope this helped!:)
4 0
3 years ago
Barclay Enterprises manufactures and sells three distinct styles of bicycles: the Youth model sells for $350 and has a unit cont
grandymaker [24]

Answer:

Break-even point in composite units = 811 units

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Break-even point in composite units

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Mixed contribution margin = $8075

Break-even point in composite units = Annual fixed costs total / Mixed contribution margin

Break-even point in composite units = 6,550,000 / 8075

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