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please answer both i will like and comment it 4) ABC Corporation and 123 Corporation each generate and EBIT of $750,000 The capital structure of

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4) ABC Corporation and 123 Corporation each generate and EBIT of $750,000 The capital structure of each is presented below: ABC Corporation 123 Corporation Debt @ 8% 1,200,000 Debt @ 8% 750,000 Common Stock 800,000 Common Stock 1,250,000 Total 2,000,000 Total 2,000,000 Shares outstanding 125,000 Shares outstanding 275,000 a) Compute EPS for each firm (assume a 30% tax rate) b) Assume a P/E ratio of 18 for each firm, what would be each firms share price? c) Assume the P/E ratio for the riskier firm (in terms of debt utilization) would be 15 and the P/E ratio for the less risky firm would be 20. What would be the share price for each firm be now? =525000/7=75000 Styles 3) The Income Statement for BC Logging Corporation is below: BC Logging Corporation Income Statement For the year ended December 31, 2018 2018 Sales 890,000 Cost of Goods Sold 600,000 Gross Profit 290,000 Selling and Admin Costs 195,000 EBIT 95,000 interest Expense 4,900 Profit Before taxes 91,100 Income Tax Expense 27,330 Net Profit 63,770 Compute the following: a) Degree of Operating Leverage b) Degree of financial leverage c) Degree of combined leverage d) The effect of a 20% increase in sales e) The effect of a 15% decrease in sales f Break even point in sales 8) Break even point considering interest expense as a fixed cost N

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