Computing company-s new eps

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Reference no: EM1334684

1. Assume the following facts about a company:

Capital (000's) EBIT (000's) $1,000
Debt ? Less Interest Expense ?
Equity $3,000 EBT $1,000
Total Capital $3,000 Taxes @ 40% 400
Shares @ $10 = 300 Earnings after Tax $ 600

What will be the company's new EPS if it borrows money at 10% interest and uses it to retire stock until capital is 40% debt? The stock can be purchased at its book value of $10 per share.

a. $3.33
b. $4.89
c. $2.93
d. none of the above

2. If you invest the $10,000 you receive at graduation (age 22) in a mutual fund which averages a 12% annual return, how much will you have at retirement in 40 years?

a. $909,090
b. $930,510
c. $783,879
d. $510,285

3. If Andre and Leslie set aside $10,000 for college tuition when their daughter is 13, how much will be available when she starts college at 18 if the account in which the money is deposited pays 12 percent compounded monthly?

a. $17,623.42
b. $18,170
c. $16,105.10
d. $16,122.26

Reference no: EM1334684

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