User Account

All Pages

Change in capital structure and indicate changes in eps

Assignment Help Finance Basics
Reference no: EM131360342

Consider a firm with an EBIT of $867,000. The firm finances its assets with $2,670,000 debt (costing 8.1 percent) and 570,000 shares of stock selling at $5.00 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 370,000 shares of stock. The firm is in the 40 percent tax bracket. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $867,000.

Calculate the EPS before and after the change in capital structure and indicate changes in EPS.

Reference no: EM131360342

Questions Cloud

Calculate the section modulus with respect to the x axis : Calculate the maximum horizontal shear stress if the member is subjected to a maximum vertical shear of 4500 lb- Calculate the section modulus with respect to the X-X axis for the sections shown.
Required rate of return-personal finance problem : Rate of return, standard deviation, and coefficient of variation Mike is searching for a stock to include in his current stock portfolio. He is interested in Hi-Tech, Inc.; he has been impressed with the company's computer products and believes th..
Plot the magnitude of each system versus frequency : Remember that the cutoff frequency is found by locating the maximum magnitude on the Bode plot and going 3 db down the magnitude scale. Find the cutoff frequencies for the given systems.
Net income assuming no other comprehensive income : Assume ABC's transactions with shareholders during 2011 included (1) dividends declared and paid in the amount of $50,000 and (2) stock options exercised with an exercise price of $75,000, but with a market value of $200,000, and (3) treasury repu..
Change in capital structure and indicate changes in eps : Calculate the EPS before and after the change in capital structure and indicate changes in EPS.
Calculate the maximum shear stress : Using the general shear formula, calculate the maximum shear stress when the beam is subjected to a maximum shear force of 140 kN.
Definite structured data and unstructured data : Definite structured data and unstructured data. A certificate is stored by the identity it belongs to. Explain certificate-based authentication including SSL/TLS, and smart cards and other hardware-based devices. Provide examples of how they are u..
What is the exception for memorizing isolated facts : What is the exception for memorizing isolated facts - What are the better types of questions to use when employing the "question generating" strategy of studying?
What is the highest possible expected monetary value : The following payoff table provides profits based on various possible decision alternatives and various levels of demand at Robert Klassan's print shop: What is the highest possible expected monetary value

Reviews

Write a Review

Finance Basics Questions & Answers

  Capital structure analysis which examines the various debt

prepare a three-page analysis of the corporate financial decision-making process at your selected organization selected

  What is the present value of the stream

What is the present value (or net present value) of the stream?

  The quantity quality price and accessibility of financial

1.what human resource component within its operating environment is a major element of a firmrsquos ability to satisfy

  What is jake weighted average cost

The bonds are selling at 97.5% of face value. The company's tax rate is 33%. What is Jake's weighted average cost of question.

  What is the closest number to the required rate of return

If the dividend growth rate is expected to remain constant at the current level, what is the closest number to the required rate of return on this stock?

  Complete a cash budget for january - march

Complete a cash budget for January - March. You must show all your work in order to receive full credit. Use the format for the budget that was used in the homework for this chapter.

  Why are interest charges not deducted

Why are interest charges not deducted when a project's cash flows for use in a capital budgeting analysis are calculated?

  Predict stock price movements

Explain the following statements: (a) There is a strong, consistent relationship between money supply changes and stock prices. (b) Money supply changes cannot be used to predict stock price movements.

  What is its price the markets rate of return

An issue of common stock's most recent dividend is $3.75. Its growth rate is 5.0%. What is its price if the market's rate of return is 7.1%?

  Explain two economic and market forces

Recommend a cash management strategy for the company that will minimize the financing cost and increase the cash flows for the company.

  Calculate the present value of the cash flow

For each of the cases shown in the following table, calculate the present value of the cash flow, discounting at the rate given and assuming that the cash flow is received at the end of the periodnoted.

  Present value of all future earnings

Your company has just announced earnings of $ 1 million. What is the present value of all future earnings if the interest rate is 7 %? (Assume all cash flows occur at the end of the year.)

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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