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Your company doesn't face any taxes and has $251 million in assets, currently financed entirely with equity. Equity is worth $8.1 per share, and book value of equity is equal to market value of equity. Also, let's assume that the firm's expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below:
State Pessimistic Optimistic
Probability of State .20 .80
Expect EBIT in State $11 million $51 million
The firm is considering switching to a 15-percent debt capital structure, and has determined that they would have to pay a 10 percent yield on perpetual debt in either event. What will be the level of expected EPS if they switch to the proposed capital structure? (Round your intermediate calculations and final answer to 2 decimal places except calculation of number of shares which should be rounded to nearest whole number.)
$2.06
$1.49
$1.79
$1.03
Samson's purchased a corner lot five years ago at a cost of $640,000. The lot was recently appraised at $820,000. At the time of the purchase, the company spent $50,000 to grade the lot and another $4,000 to build a small building on the lot to house..
A corporation is selling an existing asset for $21,000. The asset, when purchased, cost $10,000, was being depreciated under MACRS using a five-year recovery period, and has been depreciated for four full years. If the assumed tax rate is 40 percent ..
You are considering investing in one of two well-diversified portfolios. Portfolio A has an expected return of 8% and a beta of 1.35 while Portfolio B has an expected return of 6% and a beta of 0.80. Assuming that you are a rational risk-averse inves..
Terps Builders is currently using the Dual Rate method for overhead allocation. As the project manager of University View, how much overhead should you charge on the total project cost?
Wainright Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent? 1. 1375 2 1495 3 1,580 4 1630
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: What is the standard deviation of the portfolio?
This problem is about pricing through a channel of distribution. The product is shoes. The total landed cost to the importer is $20 for a pair of shoes (to their warehouse from any manufacturer around the globe).
TCO F) Company A has the opportunity to do any, none, or all of the projects for which the net cash flows per year are shown below. Projects A and B can be done together. Projects B and C can be done together. But Projects A and C are mutually ..
Evening Story Corporation has sales of $4,732,270; income tax of $558,166; the selling, general and administrative expenses of $264,444; depreciation of $328,532; cost of goods sold of $2,840,400; and interest expense of $153,129. Calculate the amoun..
In the Camerer and Lovallo experiment, let N = 10 and c = 2. Specify the number of entrants that maximizes industry profit. What will this industry profit be? Specify the number of entrants that minimizes industry profits. What will this industry pro..
Corp has total current assets of $11,690,000, current liabilities of $5,728,000 and a quick ratio of 0.85. What is its level of inventory?
The income statement for Corporation X had a negative net income for last year. Given this, you can assume the: operating cash flow was either negative, positive, or zero, but you cannot determine which one.
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