Date Wireless has the following assets: Current assets: Temporary $1,050,000 Permanent 1,100,000 Capital assets 7,250,000 Total assets
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Question:
Date Wireless has the following assets:
Current assets: Temporary $1,050,000 Permanent 1,100,000 Capital assets 7,250,000 Total assets $9,400,000
Its operating profit (EBIT) is expected to be $1.5 million. Its tax rate is 30 percent. Shares are valued at $20. Capital structure is either short-term financing at 5 percent or equity. There is no long-term debt. (Round the final answers to 2 decimal places.)
a. Calculate expected earnings per share (EPS) if the firm is perfectly hedged.
EPS$
b. Calculate expected EPS if it has a capital structure of 30% debt.
EPS$
c. Recalculate a and b if short-term rates go to 12 percent.
EPS Hedged $ Capital structure $
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