Consider a firm with an EBITDA of $900,000 and an EBIT of $800,000. The firm finances its assets with $4,610,000 debt (costing 7.1 percent, all of which is tax deductible) and 211,000 shares of stock selling at $15 per share. To reduce risk associated with this financial leverage, the firm is considering reducing its debt by $2,610,000 by selling additional shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $800,000.
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Consider a firm with an EBITDA of $900,000 and an EBIT of $800,000. The firm finances its assets with $4,610,000 debt (costing 7.1 percent, all of which is tax deductible) and 211,000 shares of stock selling at $15 per share. To reduce risk associated with this financial leverage, the firm is considering reducing its debt by $2,610,000 by selling additional shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $800,000.
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- Consider a firm with an EBITDA of $1,100,000 and an EBIT of $1,000,000. The firm finances its assets with $4,530,000 debt (costing 8.2 percent, all of which is tax deductible) and 202,000 shares of stock selling at $11 per share. To reduce risk associated with this financial leverage, the firm is considering reducing its debt by $2,530,000 by selling additional shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $1,000,000.Calculate the EPS before and after the change in capital structure and indicate changes in EPS. (Do not round intermediate calculations. Round your answers to 2 decimal places.)Consider a firm with an EBITDA of $900,000 and an EBIT of $800,000. The firm finances its assets with $4,610,000 debt (costing 7.1 percent, all of which is tax deductible) and 211,000 shares of stock selling at $15 per share. To reduce risk associated with this financial leverage, the firm is considering reducing its debt by $2,610,000 by selling additional shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $800,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS.Consider a firm with an EBITDA of $900,000 and an EBIT of $800,000. The firm finances its assets with $4,610,000 debt (costing 7.1 percent, all of which is tax deductible) and 211,000 shares of stock selling at $15 per share. To reduce risk associated with this financial leverage, the firm is considering reducing its debt by $2,610,000 by selling additional shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $800,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS. Note: Do not round intermediate calculations. Round your answers to 2 decimal places.
- Consider a firm with an EBITDA of $1,100,000 and an EBIT of $1,000,000. The firm finances its assets with $4,650,000 debt (costing 8.6 percent, all of which is tax deductible) and 216,000 shares of stock selling at $18 per share. To reduce risk associated with this financial leverage, the firm is considering reducing its debt by $2,700,000 by selling additional shares of stock. The firm's tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $1,000,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS. (Do not round intermediate calculations. Round your answers to 2 decimal places.) EPS before EPS after Changes in debt $ $ $ 2:19 1.80 0:40The Fitness Studio, Incorporated's income statement lists the following income and expenses: EBITDA = $949,000, EBIT = $780,000, interest expense = $126,000, and taxes = $228,900. The firm has no preferred stock outstanding and 100,000 shares of common stock outstanding. Calculate the earnings per share. Note: Round your answer to 2 decimal places. Earnings per shareConsider a firm with an EBIT of $850,000. The firm finances its assets with $2,500,000 debt (costing 7.5 percent and is all tax deductible) and 400,000 shares of stock selling at $5.00 per share. To reduce the firm’s risk associated with this financial leverage, the firm is considering reducing its debt by $1,000,000 by selling an additional 200,000 shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $850,000. Calculate the change in the firm’s EPS from this change in capital structure. (Round your answers to 2 decimal places.)
- Consider a firm with an EBITDA of $16,600,000 and an EBIT of $12,300,000. The firm finances its assets with $53,600,000 debt (costing 7.8 percent all of which is tax deductible) and 11,800,000 shares of stock selling at $8.00 per share. The firm is considering increasing its debt by $26,800,000, using the proceeds to buy back shares of stock. The firm's tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $12,300,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS. Note: For "Change in EPS", note negative changes with a negative sign. Round your answers to 3 decimal places. EPS before EPS after Change in EPSConsider a firm with an EBITDA of $14,200,000 and an EBIT of $11,100,000. The firm finances its assets with $51,200,000 debt (costing 7.1 percent all of which is tax deductible) and 10,600,000 shares of stock selling at $8.00 per share. The firm is considering increasing its debt by $25,600,000, using the proceeds to buy back shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $11,100,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS.Check my work Consider a firm with an EBIT of $866,000. The firm finances its assets with $2,660,000 debt (costing 8 percent and is all tax deductible) and 560,000 shares of stock selling at $5.00 per share. To reduce the firm's risk associated with this financial leverage, the firm is considering reducing its debt by $1,000,000 by selling an additional 360,000 shares of stock. The firm's tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $866,000. Calculate the change in the firm's EPS from this change in capital structure. (Do not round intermediate calculations and round your final answers to 2 decimal places.) EPS before EPS after Difference
- Consider a firm with an EBITDA of $16,800,000 and an EBIT of $12,400,000. The firm finances its assets with $53,800,000 debt (costing 7.9 percent all of which is tax deductible) and 11,900,000 shares of stock selling at $8.00 per share. The firm is considering increasing its debt by $27,000,000, using the proceeds to buy back shares of stock. The firm's tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $12,400,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS. Note: For "Change in EPS", note negative changes with a negative sign. Round your answers to 3 decimal places. X Answer is complete but not entirely correct. $ EPS before EPS after Change in EPS $ 0.541 0.564 X 0.017Consider a firm with an EBIT of P552,000. The firm finances its assets with P1,020,000 debt (costing 5.7 percent) and 202,000 shares of stock selling at P11.00 per share. The firm is considering increasing its debt by P900,000, using the proceeds to buy back 77,000 shares of stock. The firm is in the 40 percent tax bracket. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at P552,000. Calculate the EPS after the change in capital structure.Consider a firm with an EBITDA of $14,400,000 and an EBIT of $11,200,000. The firm finances its assets with $51,400,000 debt (costing 7.2 percent) and 10,700,000 shares of stock selling at $6.00 per share. The firm is considering increasing its debt by $25,800,000, using the proceeds to buy back shares of stock. The firm’s tax rate is 21 percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $11,200,000. Calculate the EPS before and after the change in capital structure and indicate changes in EPS. (Round your answers to 3 decimal places.) EPS before $ EPS after $ Changes in EPS $
