- Fin Q 1 1 (181.04 KiB) Viewed 8 times
Fin q-1
-
answerhappygod
- Site Admin
- Posts: 899603
- Joined: Mon Aug 02, 2021 8:13 am
Fin q-1
Fin q-1
Fujita, Incorporated, has no debt outstanding and a total market value of $240,000. Earnings before interest and taxes, EBIT, are projected to be $28,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12 percent higher. If there is a recession, then EBIT will be 25 percent lower. The company is considering a $140,000 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 12,000 shares outstanding. Ignore taxes for this problem. a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) > Answer is not complete. $ $ $ a-1. Recession EPS a-1. Normal EPS a-1. Expansion EPS a-2. Recession percentage change in EPS a-2. Expansion percentage change in EPS b-1. Recession EPS b-1. Normal EPS b-2. Expansion EPS b-2. Recession percentage change in EPS b-2. Expansion percentage change in EPS 1.75✔ 2.33✔ 2.61 -25.00 % 12.00✔ % -35.71 % 17.14%
Fujita, Incorporated, has no debt outstanding and a total market value of $240,000. Earnings before interest and taxes, EBIT, are projected to be $28,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 12 percent higher. If there is a recession, then EBIT will be 25 percent lower. The company is considering a $140,000 debt issue with an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 12,000 shares outstanding. Ignore taxes for this problem. a-1. Calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) a-2. Calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) b-1. Calculate earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b-2. Given the recapitalization, calculate the percentage changes in EPS when the economy expands or enters a recession. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) > Answer is not complete. $ $ $ a-1. Recession EPS a-1. Normal EPS a-1. Expansion EPS a-2. Recession percentage change in EPS a-2. Expansion percentage change in EPS b-1. Recession EPS b-1. Normal EPS b-2. Expansion EPS b-2. Recession percentage change in EPS b-2. Expansion percentage change in EPS 1.75✔ 2.33✔ 2.61 -25.00 % 12.00✔ % -35.71 % 17.14%