Integrative Optimal capital structure Main Cooling Systems, Inc., a fost o 500.000 To $2,000,000 and peened vidends of $200.000 and of than stortion capture there has a tota on the cost of debt. The theo common stock for wouls of indebtedness and the overall and return on investment Capital structure Number of common debt ratio Costo del stock shares Required returns 0% 190.000 12 15 82 175.000 11 30 91 142.000 135 5 123 114.000 159 60 14* 16.000 199 Cingsperse for each level of its Thor EPSde cated in parte har foreach level of indbless Cost of debt, de Capital structure debt ratio 0% 15 30 45 GO 8.2 9.1 123 14.8 Number of common stock shares 196,000 175,000 143,000 114,000 76,000 Required return, 12 3% 131 138 159 19.9 a. Calculate carrings per share for each level of indebtedness b. Use the equation Po EPS/r, and the earrings per share calculated in part(a) to calculate a price pershive for each level of indebtedness. c. Choose the optimal capital structure, Justify your choice Debt Ratio 0% EBIT $ 2,020,000 Less: Interest $ EBT $ Taces 40% $ Net profit $ MOS U DR, the overal Capital structure Number of common debt ratio Cost of debt, a stock shares Required returns 0% 0% 196,000 12.3% 15 82 175,000 131 30 9.1 143,000 138 45 12.3 114,000 15.9 60 148 76,000 199 a Calculate camings per share for each level of indebtedness b. Use the equation Po=EPS It, and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness c. Choose the optimal capital structure Justify your choice. Net profit $ Less: Preferred dividends $ Prats available to common stockholders 5 #shut outstanding $ 196.000 Cost of debt, d 0% capital structure Number of common debt ratio stock shares Required return, rs 0% 196,000 123% 15 82 175,000 131 30 91 143,000 13.8 45 123 114,000 15 9 60 14.8 76,000 19.9 a. Calculate eamings per share for each level of indebtedness. b. Use the equation Po=EPS/rs and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness c. Choose the optimal capital structure. Justify your choice. # shares outstanding $ 196,000 EPS $ Calculate the EPS below. (Round to the nearest dollar. Round the EPS to the nearest cont.) Cost of debt, ra Capital structure debt ratio 0% 15 30 45 60 0% 82 91 12.3 148 Number of common stock shares 196,000 175,000 143,000 114,000 76,000 Required returns 12.3% 13.1 138 15.9 19.9 a. Calculate earnings per share for each level of indebtedness b. Use the equation Po=EPS/rs and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness, c. Choose the optimal capital structure. Justify your choice Debt Ratio EBIT 15% 2.020.000 Less: Interest $ EBT Taxes 40% Net profit $ Lapital structure Number of common debt ratio Cost of debt, a stock shares Required returns 0% 0% 196,000 12.3% 15 8.2 175,000 131 30 9.1 143,000 13.8 45 123 114,000 15.9 60 148 76,000 19.9 a. Calculate camings per share for each level of indebtedness b. Use the equation Po-EPS/r, and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness, c. Choose the optimal capital structure. Justify your choice Less Preferred dividends $ Profits available to common stockholders S shares outstanding $ 175,000 EPS - Very or indebtedn Capital structure debt ratio 0% 15 30 45 60 Cost of debt, 0% 8.2 9.1 12.3 148 Number of common stock shares 196,000 175,000 143,000 114,000 76,000 Required return, 12 3% 131 13.8 15.9 19.9 a. Calculate earrings per share for each level of indebtedness b. Use the equation Po=EPS it, and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness c. Choose the optimal capital structure. Justify your choice Debt Ratio 30% EBIT S 2 020 000 $ Less: Interest EBT Taces 40% Net profit $ $ 5 Capital structure Number of common debt ratio Cost of debt, a stock shares Required returns 0% 0% 196,000 12.3% 15 8.2 175,000 13.1 30 9.1 143,000 13.8 45 123 114,000 15.9 60 14.8 76,000 19.9 a. Calculate eamings per share for each level of indebtedness b. Use the equation Po = EPS ITs and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedne c. Choose the optimal capital structure. Justify your choice. Less: Preferred dividends $ Profits available to common stockholders s # shares outstanding S 143,000 EPS S Capital structure debt ratio Number of common Cost of debt, ra stock shares Required returns 0% 0% 196,000 12.3% 15 8.2 175,000 13.1 30 91 143,000 138 45 12.3 114,000 15.9 60 14.8 76,000 19.9 a. Calculate earnings per share for each level of indebtedness. b. Use the equation Po-EPS/rs and the earnings per share calculated in part (a) to calculate a price per share for each level of indebte c. Choose the optimal capital structure. Justify your choice. Debt Ratio 45% EBIT $ 2.020,000 Less: Interest $ EBT $ Taxes 40% $ Net profil S 5 dl URU Capital structure Number of common Cost of debt, id debt ratio stock shares Required return, rs 0%. 0% 196,000 12 3% 15 82 175,000 13.1 30 9.1 143,000 13.8 45 123 114,000 15.9 50 14.8 76,000 19.9 a Calculate earnings per share for each level of indebtedness b. Use the equation Po=EPS/r, and the carings per share calculated in part (a) to calculate a price per share for each level of indebtedness. c. Choose the optimal capital structure. Justity your choice. Less Pretoed dividends 5 Profits available to common stockholders $ =shares outstanding $ 114.000 EPS 8.2 ORA U vanous levels of indebted Capital structure debt ratio Cost of debt, Number of common stock shares Required returns 0% 0% 196,000 12.3% 15 175,000 30 13.1 9.1 143,000 138 45 12.3 114,000 15.9 60 14.8 76.000 19.9 a. Calculate camings per share for each level of indebtedness, b. Use the equation Po=EPS it, and the earnings per share calculated in part (a) to calculate a price per share for each level of indebtedness, c. Choose the optimal capital structure. Justify your choice. Debt Ratio 60% EBIT $ 2,020,000 Less Interest $ EBT $ Taxes 404 $ Net profil Capital structure Number of common Cost of debt, Id debt ratio stock shares Required return, rs 0% 0% 196,000 12.3% 15 8.2 175,000 13.1 30 9.1 143,000 13.8 45 123 114,000 15.9 60 14.8 76,000 19.9 a. Calculate earnings per share for each level of indebtedness b. Use the equation Po=EPS /r, and the earnings per share calculated in part (a) to calculate a price per share for each level of indebted c. Choose the optimal capital structure. Justify your choice. Less: Preferred dividends 5 Profits available to common stockholders $ + shares outstanding $ 76,000 EPS S Integrative Optimal capitalucture Medio Coding Systems, Inc. of 1000000 EBIT $2.000.000, and preferred dividends 200.000 and a taxud alat in an effort to write the marches en dat on the cost of the number of common can ofteness, and the overall return on investment Capital structure Number of common Cost of debt stock shares Required rem 1.000 12 2 195.000 131 91 123000 138 123 114.000 15 GO 18 76.000 109 a Calpeforsch level of des . Use the PoEPS and the age pesca din part to chce a pncepe sa for each level of interes