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Lenow's Drug Stores and Hall's Pharmaceuticals are compettors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented
Lenow's Drug Stores and Hall's Pharmaceuticals are compettors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here. Lenow Hal Debt @ 10% Common stock, $10 $200,000 Debt @ 10% 580,000 Common stock, $10 par $580,000 290,000 5870,000 Total Common shares 58,000 Common shares 29.000 a. Complete the following table given eanings before interest and taxes of $33,000, $87,000, and $88,000. Assume the tax rate is 30 percent. (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) What is the relationship between e EPS of the two EBIT EBITITA EPS Hall EPS assets 870 870 firms? b-1. What is the EBIT/TA rate when the firm's have equal EPS? EBIT/TA rate b-2. What is the cost of debt? Cost of debt b-3. State the relationship between earnings per share and the level of EBIT EPS is unaflected by financial leverage when the pre-tax return on assels cost of
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