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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

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Answer:

$7.38

Explanation:

The average cost method recalculates a new cost per unit with each and every purchase made. This new costs would then be used to calculate the costs of goods sold and inventory value.

Average cost per unit = Total Costs ÷ Units available for sale

                                    = (200 x  $7 + 800 x $7 + 600  x $8) ÷ 1,600

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The average cost per unit for May is $7.38

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Answer:

2. feasibility study

Explanation:

A feasibility study is done to analyse whether for example a school should or not expand the building open new sections and so on. the study also evaluates for labor and work in progress. It is an analysis of a proposed project to determine whether it is feasible and should go further. Feasibility is further divided into different categories such as economical , technical, operational etc. It aims to check the competitiveness of the business in the market and check its economic growth.

6 0
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Tara wants to put a small portion of every paycheck into a low-risk investment. which would be her best option?
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Tara's best option to put a small portion of every paycheck into a low-risk investment is investing in an S&P 500 index fund.

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A paycheck can be defined as a financial document that is issued by an employer to an employee as payment for the work done over a period of time.

<h3>What is risk tolerance?</h3>

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Generally, the high risk that is associated with investments such as stocks, high-yield bonds, etc., is often perceived by investors to be worth the higher reward these investment brings.

In this scenario, we can reasonably infer that Tara's best option to put a small portion of every paycheck into a low-risk investment is investing in an S&P 500 index fund.

Read more on low-risk investments here: brainly.com/question/26164819

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1 year ago
Rice Corp. noticed that a check written by the company for utility expense in the amount of $1,000 was incorrectly recorded by t
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No entry is required on the company's books.

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7 0
2 years ago
A cellular service provider charged a customer $40 for 150 minutes of airtime. The same provider charged another customer $55 fo
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Answer:

C(t)=0.1t+25

Explanation:

So, we are looking for a linear equation. As we know Equation of a line has different forms, let´s use slope-intercept form:

C(t)=mt+b

Where C is the total cost as a function of t, t is the amount of airtime in minutes, m is the slope and b is the y-intercept

Now, let´s use the data provide in order to find m and b:

40=150m+b   (E1)

55=300m+b   (E2)

We have a 2X2 system of equations, let´s solve it using elimination method:

2(E1)-(E2)

25=0+b\\b=25

Replacing b in (E1) or (E2):

m=\frac{40-25}{150}

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