Perform an EPS/EBIT Analysis for Hershey. Read the information on pages 255 - 258 of the text. Following the example on page 257, Table 8-5, perform an EPS/EBIT analysis for Hershey. Use the following information for your analysis.

• Hersheysmanagement wants to raise $1 billion to expand globally.
• Determine whether Hershey should use all debt, all stock, or a 50 percent stock/50 percent debt combinationto finance this market-development strategy.
• Assume a38 percent corporate tax rate.
• Assume PepsiCosinterest rateto borrow long-term debt is 5%.
• The price per share of Hersheys stock is $25 per share.
• Use the following EBIT ranges
  • Recession -- $100 million
  • Normal -- $500 million
  • Boom -- $1 billion
• A total of 60 million shares of common stock are outstanding.

After you have calculated the EPS under each economic scenario for each of the financing options, discuss which financing option is most attractive, and whythat option is the most attractive.

Strategic Management: Concepts and Cases,16th Edition, by Fred R. David, Prentice Hall,

2017, ISBN 978- 0-13-416784-8

MIS ISSU CHAPTER 8IMPLEMENTING STRATEGIES: MARKETING ELNANCEIACCOLIANTIND AS ISSL IES 257 IMPLEMENTING STRATEGIES: MARKETING, FINANCE/ACCOUNTING, R&D, AND CHAPTER 8 TABLE 8-5 EPS/EBIT Analysis for Boeing Company (M - in millions) Amount Needed: $10,000 M Stock Price: $53.00 #of Shares Outstanding: 826 M Debt Financing Normal Common Stock Financing Recession Normal Boom Recession Boom 1,000.00 500.00 500.00 35.00 465.00 826.00 0.56 2,500.00 500.00 2,000.00 140.00 1,860.00 826.00 5,000.00 500.00 4,500.00 315.00 4,185.00 826.00 5.07 1,000.00 2,500.00 0.00 2,500.00 175.00 2,325.00 1,014.68 2.29 5,000.00 EBIT interest EBT Taxes EAT shares EPS 1,000.00 70.00 930.00 1,014.68 0.92 5,000.00 350.00 4,650.00 1,014.68 4.58 2.25 70% Stock-30% Debt 70% Debt-30% Stock Recession Normal Boom 5,000.00 150.00 4,850.00 339.50 4,510.50 958.08 Recessiorn 1,000.00 350.00 650.00 Normal 2,500.00 350.00 2,150.00 150.50 1,999.50 882.60 2.27 Boom ERIT 1,000.00 150.00 850.00 2,500.00 150.00 2,350.00 164.50 5,000.00 350.00 4,650.00 325.50 4,324.50 882.60 4.90 790.50 958.08 0.83 2.185.50 604.50 958.08 0.68