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Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented
Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented below. (a) Compute earnings per share if earnings before interest and taxes are $20.000, $27.000, and $55.000 (assume a 20 percent tax rate). (Round your answers to 2 decimal places. Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) (b) What is the relationship between earnings per share and the level of EBIT? (c) If the cost of debt went up to 11 percent and all other factors remained equal, what would be the break-even level for EBIT? (Omit the "$" sign in your response.)
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