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Calculate expected EPS if the firm is perfectly hedged

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Reference no: EM133061165

Question - King Lyon has the following assets: Current assets: $3,580,000

Capital assets: 8,400,000

Total assets: $11,980,000

During 4 months of the year, current assets drop to $1,900,000 (total assets will then be $10,300,000). Its operating profit (EBIT) is expected to be $504,500. Its tax rate is 20 percent. Shares are valued at $20. Its capital structure is short-term financing at 2 percent and long-term financing of 40 percent equity, 60 percent debt at 4 percent.

Required - Calculate expected EPS if the firm is perfectly hedged.

Reference no: EM133061165

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