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Black Berry Farms and Pea Pod Farms are each able to generate EBIT of $204,000. The separate capital structures for Black Berry and Pea Pod
Black Berry Farms and Pea Pod Farms are each able to generate EBIT of $204,000. The separate capital structures for Black Berry and Pea Pod are presented below. Black Berry Debt @ 12% Common stock $900,000 800,000 Pea Pod Debt @ 12% Common stock $500,000 1,200,000 Total $1,700,000 Total $1,700,000 Common shares 160,000 Common shares 240,000 a. Compute EPS for Black Berry (assume a 40 percent tax rate). (Round the final answers to 2 decimal places.) Choose... - Choose... Choose... - b. Compute EPS for Pea Pod (assume a 40 percent tax rate). (Round the final answers to 2 decimal places.) c. Assuming a P/E ratio of 27 for each firm, what would be the share price for Black Berry? (Round your intermediate calculations and final answers to 2 decimal places.) d. Assuming a P/E ratio of 27 for each firm, what would be the share price for Pea Pod? (Round your intermediate calculations and final answers to 2 decimal places.) Choose... - e. Assume the P/E ratio would be 22 for the riskier company in terms of heavy debt utilization in the capital structure and 35 for the less risky firm. What would the share price now be for Black Berry? (Round your intermediate calculations and final answers to 2 decimal places.) Choose... f. Assume the P/E ratio would be 22 for the riskier company in terms of heavy debt utilization in the capital structure and 35 for the less risky firm. What would the share price now be for Pea Pod? (Round your intermediate calculations and final answers to 2 decimal places.) Choose
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