calculate the earnings per share for each level of

47% History Bookmarks Window Help Unchained Melody-The Righteous Broth Principles of Managerial Finance, 15/e Learning Goals 3, 4, 6 P13-24 Integrative: Optimal capital structure Medallion Cooling Systems Inc. has total assets of $10,000,000, EBIT of $2,000,000, and preferred dividends of $200,000 and is taxed at a rate of 40%. In an effort to determine the optimal capital structure, the firm has assembled data on the cost of debt, the number of shares of common stock for various levels of indebtedness, and the overall required return on investment: Capital structure debt Cost of debt, Number of common stock Required return ratio shares 12% 200,000 170,000 140,000 0% 0% 13 15 14 30 9 16 45 12 110,000 20 60 15 80,000 a. Calculate earnings per share for each level of indebtedness. b. Use Equation 13.12D and the earnings per share calculated in part a to calculate a price per share for each level of indebtedness. 24