Compute oak farms eps after the partition

Assignment Help Financial Management
Reference no: EM131907317

Oak Farms is an unlevered firm with 4050 shares outstanding and an EBIT of 625. Corporate earnings are taxed at a rate of 36%. Calculate EPS for Oak Farms. $ Note: Your answer should be in dollars and cents. For example, $0.99. Suppose that Oak Farms makes a decision to partition (split) its assets into debt and equity. The firm issues $1250 of debt at a cost of 7.55%, and uses these funds to reduce the amount of equity on its books. The partition does not change the EBIT or the tax rate, but does reduce the number of shares outstanding to 3300. Compute Oak Farms EPS after the partition. $ Note: Your answer should be in dollars and cents.

Reference no: EM131907317

Questions Cloud

Why would people or firms ever borrow on short-term basis : If long-term credit exposes a borrower to less risk, why would people or firms ever borrow on short-term basis? Offer an example.
Average beta of the stocks that you add to portfolio : Given your goal of 7% return what should be the average beta of the stocks that you add to the portfolio?
Determine the project payback period : Determine the project's approximate internal rate of return. Determine the project's payback period.
What is the price of the call option and cost of the collar : What is the price of the Call option? What is the total cost of the collar?
Compute oak farms eps after the partition : Compute Oak Farms EPS after the partition.
Move towards adopting financial leverage is good idea : A group of shareholders of SU are not convinced that this move towards adopting financial leverage is a good idea.
Calculate the percentage of debt in corporation : Calculate the percentage of debt in the corporation, and the corporation's leverage factor.
What earnings before interest and tax must the firm : What earnings before interest and tax (EBIT) must the firm have if it were to provide $5 per share to the shareholders?
Firms of identical size operating in identical markets : Ski and Board are two identical firms of identical size operating in identical markets.

Reviews

Write a Review

Financial Management Questions & Answers

  Preparing a time-phased budget baseline

Assume that you are the project manager for the construction of 10 conference facilities in your organization’s building in Florida. A statement of work has been given to you, and contracts have already been awarded. What difficulties did you have in..

  Asset impairments

From the case study, compare the disclosure notes provided in Nestle, Swatch Group, and Royal Bank of Scotland with the disclosure notes of News Corp and CBS Corporation. Explain which disclosure notes are more informative to the stakeholders in the ..

  The price of shorter term bond when interest rates change

An investor has two bonds in his portfolio that have a face value of 1, 000 and pay a 10% annual coupon. Bond L matures in 15 years while Bond S matures in 1 year. What will the value of each bond be if the going interest payment is 5%, 8% and 12%?  ..

  What was your total return for past year

You purchased a zero coupon bond one year ago for $116.86. The market interest rate is now 7 percent. If the bond had 31 years to maturity when you originally purchased it, what was your total return for the past year? Assume semiannual compounding.

  Investor has put money in four stocks in the dollar amounts

An investor has put money in four stocks in the dollar amounts indicated and with betas specified. What is the portfolio beta?

  Calculate the expected value of projects net present value

Calculate the expected value of the project's net present value (NPV) and determine the probability that the project will have a negative NPV.

  The relevant tax rate

Mullineaux Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 14 percent, the cost of preferred stock is 6 percent, and the cost of debt is 8 percent. The relev..

  How do you find the variance of three asset portfolio

How do you find the variance of a 3 asset portfolio in excel?

  What is the market risk premium

What is the market risk premium (rM - rRF)? What is the required return of Fund P?

  What is the expected rate of return on stock

If the stock currently sells for $20 per share, what is the expected rate of return on the stock?

  What is expected price of purchase

What is the expected price of purchase? What do they spend out of pocket and what is the resulting payoff diagram?

  Ending balances-all debits and credits posted to account

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. It started only two jobs during March—Job P and Job Q. Job P was completed and sold by the end of the March and Job Q was incomplete at the end of the Mar..

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