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Harman [31]
3 years ago
13

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

er Plan I, the company would have 320,000 shares of stock outstanding. Under Plan II, there would be 240,000 shares of stock outstanding and $2,272,000 in debt outstanding. The interest rate on the debt is 10 percent, and there are no taxes.
Assume that EBIT is $700,000. Compute the EPS for both Plan I and Plan II.
Business
1 answer:
AlladinOne [14]3 years ago
6 0

Answer:

Plan I EPS = $2.19

Plan II EPS = $1.97

Explanation:

The computation of EPS for both Plan I and Plan II is shown below:-

                               Plan I                Plan II

Expected EBIT      $700,000       $700,000

Less Interest                                 $227,200

                                            ($2,272,000 × 10%)

Profit before tax a   $700,000      $472,800

Less: Tax

Earning to equity

shareholder b           $700,000      $472,800

Number of equity

Shares (a ÷ b)              $2.19             $1.97

Therefore for Plan I the EPS = $2.19 and for Plan II the EPS = $1.97

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Answer and Explanation:

1A. For investment X, given 6% discount rate, 6700 PMT, N= 9 years

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3 years ago
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Required information Use the following information for the Exercises below. Skip to question [The following information applies
Lyrx [107]

Answer:

Follows are the solution to this question:

Explanation:

In point A:

The estimated amount of uncollectible allowance =\$ \  635,000 \times 4 \% = \$ \ 2,540,000

In point B                                    Journal

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Expenditure on bad debts                \$ \ 2,526,700

Doubted debt allowance                          \$ \ 2,526,700 \  \   (\$ \ 2,540,000 - \$ \ 13,300)

(Bad Debts Expense recorded)  

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Titles and descriptions of accounts         Debit          Credit         Calculation    

Expenditure on bad debts               \$ \ 2,553, 300

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3 years ago
_________ is the elapsed time from receipt of a customer order to when the completed goods are shipped to the customer.
Leno4ka [110]

The period of time between receiving a client order and shipping the finished items to the customer is referred to as the delivery cycle time.

When it comes to measuring internal business performance, delivery cycle time is regarded as a very crucial statistic. It is defined as the period of time between the moment an order is received and the time it is actually sent.

This usually plays a significant role for both organizations and customers because prompt order processing is a skill that almost all firms and customers tend to value.

In a similar vein, it can be seen that quicker delivery cycles can also serve as a possible competitive advantage for the business and, in most situations, are essential to their existence.

To know more about delivery cycle time.

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2 years ago
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DiKsa [7]

Answer:

True

Explanation:

When a company successfully offers a product or few products to customers, it tends to expand the range of products it has to offer.

For a <u>company to increase its range of products successfully, it has to realize that it must make corresponding changes to its processes to accommodate the addition of new products.</u>

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