Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. consider a firm with an ebit of $862,000. the firm

Consider a firm with an EBIT of $862,000. The firm finances its assets with $2,620,000...

80.2K

Verified Solution

Question

Finance

image
Consider a firm with an EBIT of $862,000. The firm finances its assets with $2,620,000 debt (costing 7.6 percent and is all tax deductible) and 520,000 shares of stock selling at $6.00 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 320,000 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 $862,000 Calculate the change in the firm's EPS from this change in capital structure. (Do not found intermediate calculations and round your final answers to 2 decimal places.) EPS before EPS after Difference

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Question 2: The American Journal of Clinical Nutrition published the results of a study of the...

Statistics
Q

List the factors that influence consumer behavior as stated in chapter 3 - describe how these...

General Management
Q

What does a passing vehicle driver need to watch out for when passing a commercial...

Biology
Q

Figure shows the elliptical path of a planet about the sun The two shaded parts...

Physics
Q

Find the interior angle measures of each inscribed quadrilateral 5 B 3y 16 A D...

Geometry
Q

Find the vertical asimplates of the function Y 2x 1 2 3x 2x x 3...

Calculus
Q

What is a fiduciary relationship OA The relationship between a broker and the Texas Real...

Algebra
Q

FASB ASC 8-1 Current Assets and Current Liabilities Over the years, many official...

Accounting
Q

Please provide help with all problems. 21% tax rate. the rest of the information...

Accounting
Q

Which of the following controls ensures that employees of the entity are paid only for...

Accounting
Q

Brief Exercise 14-13 (Algo) The Baldwin Company, in its master budget [LO 14-2] The Baldwin...

Accounting
Q

As a swap broker, you are in touch with Banks A and B. In the...

Finance