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Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented
Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here. Lenow Debt @ 8% Common stock, $10 par Total Common shares Hall $300,000 Debt @ 8% 600,eee Common stock, $10 par $900,000 Total 60,000 Common shares $600,000 300,000 $900,000 30,000 a. Complete the following table given earnings before interest and taxes of $34.000, $72,000 and $89,000. Assume the tax rate is 10 percent (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) EBIT/TA $ 5 $ EBIT Total Assets 34.000 S 900.000 72,000 $ 900.000 89,000 $ 900.000 What is the relationship between % Lenow EPS Hall EPS the EPS of the two firms? SIS 0.15 Lenow EPS > Hall EPS % 5 72 $ 0.72 Lenow EPS Hall EPS %s 0.986 123 Lenow EPS Hall EPS
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