Julie Smith, an analyst with ABC Company, has collected the following data about the firm: EBITDA = $3.5 million Tax rate=38% Debt outstanding = $2.5 million Cost of debt = 10.5% Cost of common equity = 14% Shares of stock outstanding = 800,000 BV of the stock per share = $12 The firm's product market is considered stable, and the firm expects no growth, and all earnings are paid out as dividends. Calculate the firm's earning per share, assuming depreciation & amortization costs of $500,000 per year

Julie Smith, an analyst with ABC Company, has collected the following data about the firm: EBITDA = $3.5 million Tax rate=38% Debt outstanding = $2.5 million Cost of debt = 10.5% Cost of common equity = 14% Shares of stock outstanding = 800,000 BV of the stock per share = $12 The firm's product market is considered stable, and the firm expects no growth, and all earnings are paid out as dividends. Calculate the firm's earning per share, assuming depreciation & amortization costs of $500,000 per year

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 8P

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