EPS, Debt-to-Equity, Breakeven point LexMart maintains a debt-to-equity ratio of 1.0 regardless of whether the firm experiences expansion or contraction. At the present time, LexMart has $1,000 par value bonds outstanding that pay 9% annual interest. The firm also has 2.4 million shares of common stock outstanding that sells for $21 per share. a. Based on LexMart's current annual NOP of $23,500,000 and its corporate tax rate of 20%, what is its EPS? b. If LexMart would like to finance a $61 million expansion while maintaining its current debt-to-equity ratio of 1.0, how many bonds at $1,000 per bond and shares of stock will it have to sell to pay for the expansion? c. After the expansion, what level of annual NOP will LexMart have to generate to maintain its curent level of EPS? COD a LexMart's current EPS is $(Round to three decimal places)

EPS, Debt-to-Equity, Breakeven point LexMart maintains a debt-to-equity ratio of 1.0 regardless of whether the firm experiences expansion or contraction. At the present time, LexMart has $1,000 par value bonds outstanding that pay 9% annual interest. The firm also has 2.4 million shares of common stock outstanding that sells for $21 per share. a. Based on LexMart's current annual NOP of $23,500,000 and its corporate tax rate of 20%, what is its EPS? b. If LexMart would like to finance a $61 million expansion while maintaining its current debt-to-equity ratio of 1.0, how many bonds at $1,000 per bond and shares of stock will it have to sell to pay for the expansion? c. After the expansion, what level of annual NOP will LexMart have to generate to maintain its curent level of EPS? COD a LexMart's current EPS is $(Round to three decimal places)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 4P

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EPS, Debt-to-Equity, Breakeven point LexMart maintains a debt-to-equity ratio of 1.0 regardless of whether the firm experiences expansion or contraction. At the present time, Lexmart has $1,000 par value bonds outstanding that pay 11% annual interest. The firm also has 2.6 million shares of common stock outstanding that sells for $20 per share. a. Based on LexMart's current annual NOP of $25,000,000 and its corporate tax rate of 21%, what is its EPS? b. If LexMart would like to finance a $62 million expansion while maintaining it's current debt-to-equity ratio of 1.0, how many bonds at $1,000 per bond and shares of stock will it have to sell to pay for the expansion? c. After the expansion, what level of annual NOP will LexMart have to generate to maintain its current level of EPS? a. LexMart's current EPS is $ (Round to three decimal places.) C
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Hook Industries capital structure consists solely of debt and common equity. It can issue debt at rd 5 11%, and its common stock currently pays a $2.00 dividend per share (D0 5 $2.00). The stock’s price is currently $24.75, its dividend is expected to grow at a constant rate of 7% per year, its tax rate is 35%, and its WACC is 13.95%. What percentage of the company’s capital structure consists of debt?
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