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Black Berry Farms and Pea Pod Farms are each able to generate EBIT of $ 1 0 4 , 0 0 0 . The separate
Black Berry Farms and Pea Pod Farms are each able to generate EBIT of $ The separate capital structures for Black Berry and Pea Pod are presented below.
Black Berry Pea Pod
Debt @ $ Debt @ $
Common stock Common stock
Total $ Total $
Common shares Common shares
a Compute EPS for both firms assume a percent tax rateRound the final answers to decimal places.
Black Berry Pea Pod
EPS $
$
b Assuming a PE ratio of for each firm, what would be each firms share price? Round your intermediate calculations and final answers to decimal places.
Black Berry Pea Pod
Share price $
$
c Assume the PE ratio would be for the riskier company in terms of heavy debt utilization in the capital structure and for the less risky firm. What would the share price now be for each firm? Round your intermediate calculations and final answers to decimal places.
Black Berry Pea Pod
Share price $
$
d This part of the question is not part of your Connect assignment.
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