Question
The company Meta has the following data: Sales 1,000 EBIT 100 Equity 100 Debt 0 The company Beta has the following data: Sales 1,000 EBIT
The company Meta has the following data: Sales 1,000 EBIT 100 Equity 100 Debt 0 The company Beta has the following data: Sales 1,000 EBIT 100 Equity 100 Debt 0 But the company decides to increase leverage by paying a dividend of 50 at the beginning of the year. The interest rate is 5% Income tax rate is 25% Both companies had 500 shares at the beginning of the year, with a face value of 0.1 per share. At the end of the year, the market price for both companies is 750 Find Net Income ROE EPS P/E ratio For both companies and explain which one would be your choice if you were to invest in only one of them, explain in detail by using your calculations.
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