Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

(EBIT EPS analyst) and Kate Theil are not only husband and wife but antrepreneurs who have starihed the cost business. The proposed plan for the

image text in transcribed
(EBIT EPS analyst) and Kate Theil are not only husband and wife but antrepreneurs who have starihed the cost business. The proposed plan for the effort involves a ser of international retail outlets to distribute and service a full line of ingenious home garden tool. The Moros would be located in high traffic cities in Latin America such as Panama City, Boots Paolo and Buenos Aires. The entrepreneurs have proposed two financing plans Plan Ais an all common equity structure. Five million dollars would be raised by eling 250.000 shares of common stock Plan B would involve the use of long-term det fancingThree million dollars would be raised by marketing bonds with an effective Worest rate of 15 percent Under 2 million would berated by telling 100,000 shares of common stock with both plans, 55 million is needed to launch the new firms operations. The debt und raised under plan are considered to have no fixed maturity date, because this portion of financial average is thought to be a permanent part of the company's capital structure. The two romano entrenners have decided to a 22 percent tax rate in the analysis, and they have hired you on a consulting basis to do the following: a. What is the EBIT indifference level occiated with the two financing proposals? (Round to the nearest dollar) . Fit in the blanks in the following income statement for plan A Round the EPs to the decimal places and all other tone to the nearest dotar. PLANA EBIT (Type a whole number) Less interest expenses $ (Round to the nearest dollar) Earnings before taxes (EBT) (Round to the nearest dollar) Loss Taxes at 22% (Round to the nearest dollar) Not income 5 (Round to the nearest dollar) Divide: Number of common shares Type a whole number) Earnings per share (EPS) (Round to the nearest cant) Fill in the blanks in the following income statement for plan B. Round the EPS to three decimal places and all other items to the nearest doll PLAN B EBIT $ (Type a whole number) Less Interest expenses $ (Round to the nearest dolar) Earnings before taxes (EBT) 5 (Round to the nearest dolar) Less: Taxes at 22% $ (Round to the nearest dollar) Not income 5 (Round to the nearest dollar) Divide: Number of common shares (Type a whole number) Earnings per share (EPS) (Round to the nearest cent)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Understanding Terrorist Finance

Authors: T. Wittig

2011th Edition

0230291848, 978-0230291843

More Books

Students also viewed these Finance questions

Question

What is electric dipole explain with example

Answered: 1 week ago

Question

What is polarization? Describe it with examples.

Answered: 1 week ago

Question

Describe the job youd like to be doing five years from now.

Answered: 1 week ago

Question

So what disadvantages have you witnessed? (specific)

Answered: 1 week ago