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Problem Question 3: Lenow's Drug Stores and Hall's Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and
Problem Question 3: Lenow's Drug Stores and Hall's Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented next. $100,000 Lenow Debt @ 10% Common stock, $10 par Total Shares Hall Debt @ 10% Common stock, $10 par $200,000 200,000 100,000 $300,000 20,000 Total Common shares $300,000 10,000 Compute earnings per share if earnings before interest and taxes are $20,000, $30,000, and $120,000 (assume a 30 percent tax rate). Explain the relationship between earnings per share and the level of EBIT. b
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