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Loving Gardens (LG) has $5 million in assets, $500,000 EBIT, and a marginal tax rate equal to 40 percent. If LG's debt ratio (D/TA) is

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Loving Gardens (LG) has $5 million in assets, $500,000 EBIT, and a marginal tax rate equal to 40 percent. If LG's debt ratio (D/TA) is 60 percent, interest on its debt is 11 percent, whereas if the debt ratio is 30 percent, interest is 6 percent. LG will have 44,000 shares of stock outstanding if it is financed with 60 percent debt, but it will have 56,000 shares outstanding with 30 percent debt. Calculate LG's EPS and ROE (ROE Net income/Equity) for each capital structure. Do not round intermediate calculations. Round your answers for EPS to the nearest cent and for ROE to two decimal places. 30% debt EPS ROE 60% debt $ % Which capital structure is better? The capital structure with Salec debt appears to be better. Senior management of Nancy's Nooks (NN) has determined there is a 40 percent chance EPS will be $9.50 next year, there is a 50 percent chance EPS will be $5.00, and there is a 10 percent chance EPS will be -$5.90. Calculate the expected value, standard deviation, and coefficient of variation for NN's forecasted EPS. Do not round Intermediate calculations. Round your answers for the expected value and standard deviation to the nearest cent and for the coefficient of variation to two decimal places. Expected value: $ Standard deviation: $ Coefficient of variation

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