Calculate the change in the firm eps

Assignment Help Business Management
Reference no: EM132398466

Consider a firm with an EBIT of $857,000. The firm finances its assets with $2,570,000 debt (costing 8.2 percent and is all tax deductible) and 470,000 shares of stock selling at $8.00 per share. To reduce the firm's risk associated with this financial leverage, the firm is considering reducing its debt by $1,000,000 by selling an additional 270,000 shares of stock. The firm's tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $857,000.

Calculate the change in the firm's EPS from this change in capital structure. (Do not round intermediate calculations and round your final answers to 2 decimal places.)

Before EPS

After EPS

Difference

Reference no: EM132398466

Questions Cloud

How is the issuance of common stock : On the Statement of Cashflows, how is the issuance of common stock and the repurchase of common stock handled?
Understanding the variation of bond values and yields : Understanding the variation of bond values and yields. DMA Corporation has bonds on the market with 14.5 years to maturity, a YTM of 5.3 percent
Each of the business form-sole proprietorship-partnership : What are the advantages and disadvantages of each of the business form. sole proprietorship, partnership and a corporation.
Computed percentage depletion-allowable percentage : What are the computed percentage depletion and allowable percentage depletion deduction?
Calculate the change in the firm eps : Calculate the change in the firm's EPS from this change in capital structure.
What is the cost to contractors based on cost : If the selling price for cabinets is $9,377, what is the cost to contractors based on cost?
Increase production at a rate : Cooling Tools, Inc. is currently producing 574 of small refrigerators per month but the company's CEO plans to increase production at a rate of 6.94 percent per
History 2270 American History Research Project Assignment : History 2270 American History Research Project Assignment Help and Solution, Assessment Writing Service Biographical Essay - evaluate, and analyze sources.
How much cash will be needed to pay the dividend : How much cash will be needed to pay the dividend? When will the stock begin selling ex dividend?

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd