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The most recent income statement for Tucker Manufacturing follows. Tucker is funded solely with debt capital and common equity, and it has 3,000,000 shares of
The most recent income statement for Tucker Manufacturing follows. Tucker is funded solely with debt capital and common equity, and it has 3,000,000 shares of common stock currently outstanding. This Year's Data Sales Less: Variable costs Gross profit Less: Fixed operating costs Net operating income (EBIT) Less: Interest expense Taxable income (EBT) Less: Tax expense (40%) $40,000,000 20,000,000 20,000,000 8,000,000 12,000,000 800,000 11,200,000 4,480,000 $6,720,000 Next Year's Projected Data $43,200,000 21,600,000 21,600,000 8,000,000 13,600,000 800,000 12,800,000 5,120,000 7,680,000 $2.56 Net income Earnings per share (EPS) $2.24 Given this information, complete the following table and then answer the questions that follow. When performing your computations, round your EPS value and the percentage change values to two decimal places. Tucker Manufacturing Data DOL (Sales = $40,000,000) DFL (EBIT = $12,000,000) DCL (Sales = $40,000,000) Everything else remaining constant, assume Tucker Manufacturing decides to sell 520,000 shares of preferred stock that would pay $4 per share per year in cash dividends. How would this affect Tucker's DOL, DFL, and DCL? The DOL would be expected to . The DFL would be expected to The DCL would be expected to
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