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grandymaker [24]
3 years ago
10

Money, Inc., has no debt outstanding and a total market value of $240,000. Earnings before interest and taxes, EBIT, are project

ed to be $26,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 18 percent higher. If there is a recession, then EBIT will be 20 percent lower. Money is considering a $150,000 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 15,000 shares outstanding. Ignore taxes for this problem.
a. Calculate earnings per share, EPS, under each of the three economic scenarios (recession, normal, expansion) before any debt is issued.

b. Calculate the percentage changes in EPS when the economy expands or enters a recession.

c. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization.

d. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession.

Business
1 answer:
lara31 [8.8K]3 years ago
7 0

Answer:

a. Calculate earnings per share, EPS, under each of the three economic scenarios (recession, normal, expansion) before any debt is issued. = 1.38667

b. Calculate the percentage changes in EPS when the economy expands or enters a recession. = -20.00%

c. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. = 1.56444

d. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. = -37.14%

Explanation:

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Heedy Winery accumulates the costs incurred in the labeling process in an activity cost pool. Costs for the labeling process are
klasskru [66]

Answer:

$80,000

Explanation:

The computation of allocation labeling expenses is shown below:-

Overhead rate = Labeling process cost ÷ Labels generated

$320,000 ÷ $640,000

= $0.5 per label

Allocation labeling expenses = Wine estimated bottles × Overhead rate

= $160,000 × $0.5

= $80,000

Therefore for computing the allocation labeling expenses we simply applied the above formula.

6 0
3 years ago
Sean, age 37, sold the home he purchased three years ago and now rents an apartment. he had originally purchased his home for $8
ZanzabumX [31]
28,800     is the answer
                                                                                                                                       
6 0
3 years ago
Greta is conducting an initial performance review for new employee Natasha. Natasha displays some competence but low commitment.
Tatiana [17]

Answer:

D2

Explanation:

Since Natasha displays some competence and has low commitment to her job,he falls into D2 category.The leadership style that needs to be used is Coaching to motivate Natasha and get the things done.

8 0
3 years ago
Teresa purchased a necklace for $100 in 1964. In 2014, Teresa gave the necklace to her granddaughter, Lindsey.
padilas [110]

Answer:

d)$1,100 long-term capital gain

Explanation:

Given the information from the question. We know that a long-term capital gain or loss comes from investment that was possessed for a year or longer. However in this case, since the necklace was a gift .Therefore, there were no capital gain in 2014. In 2016, Lindsey sold the necklace for $1200. Therefore, the capital gain on the necklace will calculated as $1200- $100 = $1100. Where the $100 is a cost purchase for the previous owner. Therefore, long-term capital gain is $1100 which is option D.

8 0
3 years ago
Hilliard Pharmaceuticals and Ahrens Vitamins, Inc., have high market commonality, both geographically and in the market segments
Mama L [17]

Answer: C. Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.

Explanation:

Ahrens will respond aggressively because of the high multimarket contact between Hilliard and Ahrens.

Ahrens Vitamins and Hilliard Pharmaceuticals have high Market commonality. They operate in the same geographical area and their target market is the same, meaning an increase in Profits for Hilliard Pharmaceuticals is a decrease in profits for Ahrens Vitamins, an attack from Hilliard will ave severe consequences for Ahrens Pharmaceuticals as they compete for the same target market.

Ahrens Vitamins will have to respond aggressively to attacks from Hilliard Pharmaceuticals in order to maintain their position in the market  

6 0
3 years ago
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