Khonaysser Motors needs a total capital of $2,500,000 for its new project. The companys debt ratio is 35% and they are paying interest equal to 10%. The number of shares expected to be constant at 100,000 shares during the year 2020. Below you can find expected useful information for the year 2020. Economy Probability Units Sold Good 0.25 4,000 Normal 0.40 3,000 Weak 0.35 2,700 Price / Unit $ 1000 Fixed Costs $ 1,500,000

Variable cost/ Unit $ 350 Price /Share $ 16.25 Tax Rate 40%

1: Find Total Equity *

a.$1,625,000

b.$1,675,000

c.$1,750,000

d.$875,000

2: Find Interest Expense *

$88,000

$87,500

$87,250

$87,000

3: Calculate EPS if the economy is Good *

$6.075

$2.175

$2.125

$1.005

4: Calculate EPS if the economy is Normal *

$6.075

$2.175

$2.125

$1.005

5: Calculate EPS if the economy is Weak *

$6.075

$2.175

$2.125

$1.005

6: Calculate ROE if the economy is Good *

40.20%

37.38%

13.38%

6.18%

7: Calculate ROE if the economy is Normal *

40.20%

37.38%

13.38%

6.18%

8: Calculate ROE if the economy is Weak *

40.20%

37.38%

13.38%

6.18%

9: Calculate the expected ROE *

16.86%

37.38%

18.75%

6.18%

10: Calculate the risk in ROE (ROE) *

12.2502%

2.8456%

1.9544%

2.3318%

11: Calculate the expected EPS *

$3.2035

$2.7405

$2.5258

$1.9062

12: Calculate the risk in EPS (EPS) *

$3.5235

$1.9987

$2.5225

$1.7564