Question
Ornaments, Inc., is an all-equity firm with a total market value of $487,000 and 15,200 shares of stock outstanding. Management believes the earnings before interest
Ornaments, Inc., is an all-equity firm with a total market value of $487,000 and 15,200 shares of stock outstanding. Management believes the earnings before interest and taxes (EBIT) will be $67,900 if the economy is normal. If there is a recession, EBIT will be 20 percent lower, and if there is a boom, EBIT will be 30 percent higher. The tax rate is 40 percent. What is the EPS in a recession?
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Understanding financial statements
Authors: Lyn M. Fraser, Aileen Ormiston
9th Edition
136086241, 978-0136086246
