1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Brrunno [24]
3 years ago
9

Round Hammer is comparing two different capital structures: An all-equity plan (Plan I) and a levered plan (Plan II). Under Plan

I, the company would have 200,000 shares of stock outstanding. Under Plan II, there would be 150,000 shares of stock outstanding and $3 million in debt outstanding. The interest rate on the debt is 8 percent, and there are no taxes.
a. If EBIT is $675,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
b. If EBIT is $925,000, what is the EPS for each plan? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
c. What is the break-even EBIT? (Do not round intermediate calculations. Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)
Business
1 answer:
emmasim [6.3K]3 years ago
3 0

Answer:

a. If EBIT is $675,000, what is the EPS for each plan?

  • Plan I: EPS = $675,000 / 200,000 = $3.38 per stock
  • Plan II: EPS = ($675,000 - $240,000) / 150,000 = $2.90 per stock

b. If EBIT is $925,000, what is the EPS for each plan?

  • Plan I: EPS = $925,000 / 200,000 = $4.63 per stock
  • Plan II: EPS = ($925,000 - $240,000) / 150,000 = $4.57 per stock

c. What is the break-even EBIT?

  • $960,000

Explanation:

Plan I:

  • 200,000 outstanding stocks

Plan II:

  • 150,000 outstanding stocks
  • $3,000,000 in outstanding debt (8% interest rate)

break even EBIT

x / 200,000 = (x - 240,000) / 150,000

x = 200,000(x - 240,000) / 150,000

x = 1.3333(x - 240,000)

x = 1.3333x - 320,000

320,000 = 1.3333x - 1

320,000 = 0.3333x

x = 320,000 / 0.3333 = $960,000

You might be interested in
Which Internet technology allows businesses to make presentations and share visual aids such as charts and graphs?
Triss [41]

Answer:

c

Explanation:

3 0
3 years ago
Read 2 more answers
Flora, who owns and operates garden fresh organic farms, agrees to sell harvesters grocery a minimum quantity of fresh fruits an
Rina8888 [55]
<span>Breached. Explanation: A contract is a legally binding agreement between two parties. Once an agreement is signed between two parties, both parties are subject to terms and conditions written in the agreement. As in the above example, Flora agrees to sell harvesters grocery a minimum quantity of fresh fruits and vegetables every week for three months, that means Flora is subject to the agreement that she will sell that no matter what the future market price will be, whether it increases or decreases. As Flora decides not to deliver the agreed order, it is a violation of terms and conditions of the agreement/contract. So the contract is breached.</span>
7 0
3 years ago
Shelley’s Salsa produces and sells organic salsa. Last year it sold 3 million tubs of salsa at a price of $3 per tub. For last y
Murrr4er [49]

Answer: Option B

Explanation:

A. Explicit cost are the cost paid to others in return of their service. Hence Option A is incorrect.

B. Revenue is the total amount of earnings a company have before deducting for expenses. Hence Option B is correct.

C. Accounting profit means (Revenue - explicit cost) . Hence Option C is incorrect.

D. Economic profit means (Revenue - explicit cost - implicit cost) . Hence Option  D is incorrect.

6 0
3 years ago
How much money does the founder of Google make a year?
ElenaW [278]
There are actually two makers, and they both agreed to a one dollar salary a year.
8 0
3 years ago
Gander, an apparel company, is known to be a profit-hungry company. It lands in a controversy when it comes to light that the co
Otrada [13]

Answer:

Legal but Unethical

Explanation:

Based on the information provided within the question it can be said that Gander's business conduct is Legal but Unethical. It is legal because since it is a developing country there is most likely no law against the amount that the company's must pay employees. On the other hand it is unethical because the company is taking advantage of the necessity of the workers and is paying them nonliving wages.

If you have any more questions feel free to ask away at Brainly.

7 0
3 years ago
Other questions:
  • Justin is in charge of the central region, with several dozen stores reporting to him. Last year, he analyzed sales data for dem
    8·1 answer
  • Jeff cannot find any of his receipts for entering into his budget. In addition, he cannot find any of his bank statements. What
    10·1 answer
  • What finger do you use to strike the T key?
    9·2 answers
  • Negative performance reviews that lack measurable and realistic goals are most likely to
    13·1 answer
  • Kansas Enterprises purchased equipment for $72,500 on January 1, 2021. The equipment is expected to have a five-year service lif
    14·1 answer
  • Penguin Island produces capital goods and consumption goods. Suppose its economy experiences growth. In this case, growth means
    11·1 answer
  • Why might business professionals fail to speak up after observing unethical behavior in their company
    14·1 answer
  • What are the essential elements for a commodity to be rich in economics.​
    6·1 answer
  • If a contingency in a purchase agreement is not fulfilled despite a good faith effort to fulfill it, the party who benefits from
    9·1 answer
  • refer to figure 13-5. which of the following statements is correct?group of answer choicesmarginal cost is rising for quantities
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!