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Verdich [7]
3 years ago
11

Ornaments, Inc., is an all-equity firm with a total market value of $531,000 and 19,600 shares of stock outstanding. Management

believes the earnings before interest and taxes (EBIT) will be $74,700 if the economy is normal. If there is a recession, EBIT will be 15 percent lower, and if there is a boom, EBIT will be 25 percent higher. The tax rate is 34 percent. What is the EPS in a recession
Business
1 answer:
Anna35 [415]3 years ago
3 0

Answer:

The EPS in recession is 2.14 $/share.

Explanation:

If there is a recession, EBIT will be 15% lower than $74,700.

That means an EBIT of $74,700*(1-0.15)=$63,495.

The net income that will be paid in dividends is

Net income = EBIT*(1-tax rate) = $ 63,495 * (1-0.34) = $ 41,906.7

If there are 19,600 shares of stock outstanding and no preferred dividends, the EPS can be calculated as

EPS = (Net dividend pay / common shares) = 41,906.7 / 19,600

EPS = 2.14 $/share.

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what do you mean? enderstate

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Cashmere Soap Corporation had the following items listed in its trial balance at 12/31/2021: Currency and coins $ 620 Balance in
Tresset [83]

The amount included by Cashmere Soap Corporation in its year-end balance sheet as cash and cash equivalents is <u>2. $10,620</u>.

<u>Explanation</u>:

<em><u>Given</u></em>:

Currency and coins= $620

Balance in checking account= $1,600

Customer checks waiting to be deposited= $2,500

Treasury bills= $2700

Marketable equity securities= $10,600

Commercial paper cost= $5900

The amount included by Cashmere Soap Corporation in its year-end balance sheet as cash and cash equivalents= 620+1600+2500+5900

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The amount included by Cashmere Soap Corporation in its year-end balance sheet as cash and cash equivalents is <u>$10,620</u>.

5 0
3 years ago
To satisfy the demands of the Indian market, Mary Kay developed the Mary Kay MelaCEP Whitening System, which contained seven pro
poizon [28]

Answer:

The correct answer is Product adaptation.

Explanation:

Product adaptation is the process by which it is modified so that it is well received by different customers or markets. An adaptation strategy is particularly important for companies that export their products, as they ensure that they meet the cultural and legislative demands of the country they are targeting.

Adaptation is also important for companies that want to introduce new products into new markets but do not have enough resources or means to develop completely new items.

6 0
3 years ago
If nominal GDP rises, Multiple Choice real GDP must also rise. real GDP may either rise or fall. we can be certain that the pric
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Answer:

Real GDP may either rise or fall.

Explanation:

Real GDP = (Nominal GDP ÷ Deflator) × 100

Real gross domestic product is defined as the measure of the economic output in a particular nation which takes into account the effect of both inflation and deflation in an economy.

If there is an increase in the nominal GDP from 100 to 110 and increase in inflation from 0 to 2% then as a result the real GDP will rise because percentage increase in nominal GDP is greater than percentage increase in inflation.

If there is an increase in the nominal GDP from 100 to 110 and increase in inflation from 0 to 15% then as a result the real GDP will fall because percentage increase in nominal GDP is lower than percentage increase in inflation.

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The equilibrium quantity of labor increases and the equilibrium wage decreases when: labor demand shifts to the left, if wages a
gregori [183]
<span>The equilibrium of labor is dependent upon how the demand for labor and wages shifts. If the demand shifts to the left and wages are flexible, then the quantity of labor increases and wages decreases. If labor supply shifts to the left and wages are flexible, labor quantity will again increase and wages will decrease. The same will occur when labor demand and labor supply shifts to the right, again, assuming that wages remain flexible.</span>
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4 years ago
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