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Investments Inc. currently has $ 3 . 5 million in debt outstanding, bearing in interest rate of 1 2 . 3 % . It wishes
Investments Inc. currently has $ million in debt outstanding, bearing in interest rate of It wishes to finance a $ million expansion program and is considering five alternatives. The preferred stock dividend will be and the price of common stock will be $ per share. The company currently has shares of common stock outstanding and is in tax bracket. a If the earnings before interest and taxes are $ million, what would be earning per share for five alternatives, assuming no immediate increase in the operating profit. Compute the degree of financial leverage DFL for each alternatives at the expected EBIT level of $ million. Which alternative do you prefer and why?
Investments Inc. currently has $ million in debt outstanding, bearing in interest rate of It
wishes to finance a $ million expansion program and is considering five alternatives. The preferred stock dividend will be and the price of common stock will be $ per share. The
company currently has shares of common stock outstanding and is in tax bracket. a If the earnings before interest and taxes are $ million, what would be earning per share for
five alternatives, assuming no immediate increase in the operating profit. Compute the degree of financial leverage DFL for each alternatives at the expected EBIT level
of $ million.
Which alternative do you prefer and why?
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