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Plesae help me find the missing blank solutions. Problem 13-1 EBIT and Leverage [LO 1] Kaelea, Inc., has no debt outstanding and a total market
Plesae help me find the missing blank solutions.
Problem 13-1 EBIT and Leverage [LO 1] Kaelea, Inc., has no debt outstanding and a total market value of $57,000. Earnings before interest and taxes, EBIT, are projected to be $8,200 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 22 percent higher. If there is a recession, then EBIT will be 33 percent lower. Kaelea is considering a $20,700 debt issue with an interest rate of 8 percent. The proceeds will be used to repurchase shares of stock. There are currently 3,800 shares outstanding. Ignore taxes for this problem. Requirement 1 (a) Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) EPS Recession Normal Expansion 1.45 2.16 2.63 (b) Calculate the percentage changes in EPS when the economy expands or enters a recession. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places (e.g., 32.16).) Recession ExpansionStep by Step Solution
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