Suppose that in 2016, Global launches an aggressive marketing campaign that boosts sales by 15%. However, their operating margin falls from 5.57 % to

4.5 %. Suppose that they have no other income, interest expenses are unchanged, and taxes are the same percentage of pretax income as in 2015.

a. What is Global's EBIT in

2016?

b. What is Global's income in

2016?

c. If Global's P/E ratio (25.225.2) and number of shares outstanding (3.63.6

million) remains unchanged, what is Global's share price in

2016?

GLOBAL CONGLOMERATE CORPORATION
Income Statement
Year Ended December 31 (in $ millions)
	2015	2014
Total sales	186.70	176.10
Cost of sales	(153.40)	(147.30)
Gross Profit	33.30	28.80
Selling, general, and administrative expenses	(13.50)	(13.00)
Research and development	(8.20)	(7.60)
Depreciation and amortization	(1.20)	(1.10)
Operating Income	10.40	7.10
Other income	long dash	long dash
Earnings before interest and taxes (EBIT)	10.40	7.10
Interest income (expense)	(7.70)	(4.60)
Pretax income	2.70	2.50
Taxes	(0.70)	(0.60)
Net Income	2.00	1.90
Earnings per share:	$0.556	$0.528
Diluted earnings per share:	$0.526	$0.500