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fgiga [73]
3 years ago
13

Paradise Travels is an all-equity firm that has 6,000 shares of stock outstanding at a market price of $34 a share. The firm's m

anagement has decided to issue $40,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 7 percent. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.
Business
1 answer:
xenn [34]3 years ago
3 0

Answer:

$2.38

Explanation:

Number of shares purchased

= $40,000 / $34

= $1,176

EBIT / 6,000 = [EBIT - ($40,000 * 0.07)] / (6,000 - 1176)

EBIT / 6,000 = (EBIT - $2,800) / 4,824

4,824 EBIT = 6000 EBIT - $16,800,000

1,176 EBIT = $16,800,000

EBIT = $14,285.71

Earning per Shares at Break-even level of earning

= [EBIT - ($40,000 * 0.07)] / (6,000 - 1,176)

= ($14,285.71 - $2,800) / 4,824

= $11,485.71 / 4,824

= $2.38

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Marina86 [1]

Answer:

$42

Explanation:

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ser-zykov [4K]

Answer:

Therefore I can borrow $19646.12 from E-Loan.

The interest I will pay for the loan is $1,857.88.

Explanation:

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6 0
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kotegsom [21]

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1. Money.

4. Time.

5. Considerable effort.

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Suppose that web slinger provides internet service for all 40,000 homes that purchase internet service in the metropolitan area.
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This situation is a monopoly
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