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You plan to invest in one of two home delivery pizza companies,Bong and Bong. They are identical except for their use of debt (wd) and
You plan to invest in one of two home delivery pizza companies,Bong and Bong.
They are identical except for their use of debt (wd) and the interest rates on their debt
Both companies have $3,000,000 in capital. Both have an expected EBIT of $500,000 and a Tax Rate of 35$
Calculate the EPS of each company.
EPS=NI/Shares
|
| BING | BONG |
| wd | 70% | 20% |
| Shares | 90,000 | 240,000 |
| Int. rate | 12% | 10% |
| BING's EPS | $1.27 $0.97 $1.87 $1.19 $1.79 |
| BONG's EPS | $1.27 $0.97 $1.87 $1.19 $1.79 |
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