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The Connecticut Computer Company has the selected financial results shown below. 15% Debt 40% Debt 75% Debt Debt $22,500 Equity 127,500 Total Capital $150,000 Shares@

The Connecticut Computer Company has the selected financial results shown below.

15% Debt 40% Debt 75% Debt
Debt $22,500
Equity 127,500
Total Capital $150,000
Shares@ $5 25,500
EBIT $15,000
Interest (10%) 2,250
EBT $12,750
Tax (40%) 5,100
Net Income $7,650
ROE
EPS

The company is considering a capital restructuring to increase leverage from its present level of 15% of capital.

Assume Connecticut Computer Company is earning an EBIT of $15,000 the chart showing the implication of adding more leverage. Round ROE to one decimal place. Round EPS to two decimal places. Enter all amounts as positive numbers.

15% Debt 40% Debt 75% Debt
Debt $22,500 $ $
Equity 127,500
Total Capital $150,000 $ $
Shares@ $5 25,500
EBIT $15,000
Interest (10%) 2,250
EBT $12,750 $ $
Tax (40%) 5,100
Net Income $7,650 $ $
ROE % % %
EPS $ $

$

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