Suppose Super Pumps Inc. wants to expand production of its new solar-powered bilge pumps. It projects...
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Suppose Super Pumps Inc. wants to expand production of its new solar-powered bilge pumps. It projects the EBIT of $3 million if the expansion is successful. Assume the projected total funds needed for this expansion are $4 million. Also assume Super Pumps could finance the $4 million by selling bonds with a pretax interest cost of 13% or by selling equity at $10 per share. There are one million shares outstanding, an initial debt of $2 million, and the firm's tax rate is 30%. What is the EBIT-EPS indifference point? Write your answer in millions, to two decimal places. That is, if your answer is $8,340,500,000, write 8340.50. Suppose Super Pumps Inc. wants to expand production of its new solar-powered bilge pumps. It projects the EBIT of $3 million if the expansion is successful. Assume the projected total funds needed for this expansion are $4 million. Also assume Super Pumps could finance the $4 million by selling bonds with a pretax interest cost of 13% or by selling equity at $10 per share. There are one million shares outstanding, an initial debt of $2 million, and the firm's tax rate is 30%. What is the EBIT-EPS indifference point? Write your answer in millions, to two decimal places. That is, if your answer is $8,340,500,000, write 8340.50.
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Calculating the EBITEPS indifference point for Super Pumps Inc Understanding EBITEPS Indifference Th... View the full answer
Related Book For
Introduction to Operations Research
ISBN: 978-1259162985
10th edition
Authors: Frederick S. Hillier, Gerald J. Lieberman
Posted Date:
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