4. During 3 months of the year, current assets drop to $400,000.Its operating profit (EBIT) is expected to be $620,000. Its taxrate is 40 percent. Shares are valued at $10. Its capital structureis short-term financing at 3 percent and long-term financing of 50percent equity, 50 percent debt at 6 percent. (Round the finalanswers to 2 decimal places.)
a. Calculate expected EPS if the firm is perfectly hedged. EPS$
b. Calculate expected EPS if Phu is a more aggressive with itscapital structure and finances all current assets and 20 percent ofits capital assets with short-term loans. EPS $
c. Recalculate a and b if short-term rates go to 8 percent whilelong-term rates remain the same. EPS Perfectly Hedged $ Capitalstructure $
