Top Up is a levered firm with assets valued at $300,000, has $25,000 of debt issued at 7% interest, and 2,000 shares of stock outstanding. Suppose that corporate profits are subject to a tax rate of 25%. Which of the following comes closest to the earnings before interest and tax (EBIT) of Top Up if its earnings per share (EPS) is $0.50?

a) $1,226

b) $1,753

c) $1,508

d) $3,083

e) $3,750

Answer rating: 100% (QA)

EPS 05 No of Shares 2000 Total Earnings 1000 Tax 25 P... View the full answer