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Julie Johnson has collected the following data about the firm: EBITDA = $3.5 million Tax rate = 38% Debt outstanding = $2.5 million Cost of
Julie Johnson has collected the following data about the firm:
EBITDA = $3.5 million
Tax rate = 38%
Debt outstanding = $2.5 million
Cost of debt = 10.5%
Cost of common equity = 14%
Shares of stock outstanding = 800,000
BV of the stock per share = $12
The firms product market is considered stable, and the firm expects no growth, and all earnings are paid out as dividends. Calculate the firms earning per share, assuming depreciation & amortization costs of $500,000 per year.
A. 1.10 B. 2,12 C. 1.70 D. 4.16
E. 5.10
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