Question
BMW AUDI Debt @ 5% $300,000 Debt @ 7% $700,000 Common Stock @ $3.50 per Share $700,000 Common Stock @ $3.00 Per Share $300,000 TOTAL
| BMW |
| AUDI |
|
| Debt @ 5% | $300,000 | Debt @ 7% | $700,000 |
| Common Stock @ $3.50 per Share | $700,000 | Common Stock @ $3.00 Per Share | $300,000 |
| TOTAL | $1,000,000 | Total | $1,000,000 |
| # Shares of Common Stock | 200,000 |
| 100,000 |
Compute the Earnings Per Share @$1,000,000 Operating Income, assume a 35% tax rate
|
| BMW | AUDI |
| Earnings before interest & taxes |
|
|
| -Interest expense |
|
|
| Earnings before taxes |
|
|
| -Taxes @ 35% |
|
|
| Earnings after taxes |
|
|
|
|
|
|
|
|
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Which company has the higher Earnings After Tax?
| A. | AUDI | |
| B. | BMW | |
| C. | They are the same | |
| D. | Need more information |
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Capital Market Finance
Authors: Patrice Poncet, Roland Portait, Igor Toder
1st Edition
3030845982, 978-3030845988
