Calculate the firm net income and eps

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Question:

Julie Smith, an analyst with ABC Company, has collected the following data about the firm:

EBITDA  = $3.5 million

Tax rate  = 38%

Debt outstanding  = $2.5 million

Cost of debt = 10.5%

Cost of common equity = 14%

Shares of stock outstanding = 800,000

BV of the stock per share = $12

The firm's product market is considered stable, and the firm expects no growth, and all earnings are paid out as dividends. Assuming depreciation & amortization costs of $500,000 per year, calculate the firm's net income and EPS.

Reference no: EM131081273

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