Question
help me solve a company has no debt outstanding and a total market value of $150,000 earnings before interest and tax, EBIT will be projected
help me solve
a company has no debt outstanding and a total market value of $150,000 earnings before interest and tax, EBIT will be projected to be $28,000 if economic conditions are normal. if the expansion in the economy is strong EBIT 20 percent higher, if there is a recession EBIT will be 25% lower. The company is considering $60,000 debt issue with an interest of 7%. the proceeds will be used to repurchase shares of stock. There are currently $10,000 shares outstanding.. ignore taxes for the problem.
calculate earnings per share EPS under the 3 economic scenarios(normal, expansion and recession)
calculate percentage changes in EPS
Calculate earnings per share under the three scenarios
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