SUBJECT - FINANCIAL MANAGEMENT

Abrar Bhd. is trying to determine its optimal capital structure. The company's investment bankers have suggested that the company recapitalize and propose a new capital structure under various EBIT scenarios. All values are market values. Required: a) Calculate the EPS during an expansion for the proposed capital structure. (6 Marks) b) Calculate the EPS under the current capital structure if there is a recession. (6 Marks) c) Calculate the ROE for the proposed capital structure if the expected state occurs. a) Calculate the P/E ratio for the proposed capital structure if there is a recession. (7 Marks) b) If the company is expected to generate earnings of RM2.53 per share next year. The mean ratio of share price to expected earnings of competitors in the same industry is 15 . Based on this information, determine the value of the company's shares. (2 Marks)