If a firm is hiring inputs under purely competitive conditions, then any level of output will be produced with the least-cost co
1 answer:
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Answer:
X1 EPS = $ 3.44 per share
X2 EPS = $ 3.88 per share
Explanation:
X1: Earning per share
$1,070,000 / 311,000 shares outstanding = $3.44 per share
X2: net income calcualtions
1,070,000 x ( 1 + 24%) = 1,326,800
X2 shares outstanding:
beginning 311,000 + issued 31,000 = 342,000
EPS: 1,326,800 / 342,000 = 3,8795 = 3.88
Answer:
a) $337,615.38
b-1) $360,910.85
b-2) $415,266.92
c-1) $362,637.36
c-2) $438,461.54
Explanation:
a) To find the current value of the company, we have:
=
= $337,615.38
b-1) If the company takes on debt equal to 30 percent of its unlevered value.
337,615.38 + (0.23 * 337,615.38 * 0.30)
= $360,910.85
b-2) When the company can borrow at 10 percent. The value of the firm if the company takes on debt equal to 100 percent of its unlevered value will be:
337,615.38 + (0.23 * 337,615.38 * 1)
= $415,266.92
c-1) The value of the firm if the company takes on debt equal to 30 percent of its levered value:
= $362,637.36
c-2) The value of the firm if the company takes on debt equal to 100 percent of its levered value:
= $438,461.54