Assume that the proposed recapitalization program was announced on January 1, 2020. Markum's Net Income for the year 2020 was forecasted by an analyst on December 31, 2019 (i.e., one day prior to the announcement of the proposed recapitalization program) to be $23.08 million. The analyst was not aware of the recapitalization plans, and simply used 2019 Net Income number as a forecast for 2020 since she expected the company to grow at 0%, same as the industry growth rate. Assume Earnings per Share (EPS) is defined as Net Income divided by Shares Outstanding. What will Markum's forecasted EPS be for the year 2020 prior to the announcement of the recapitalization program? Assume that Markum completes its entire share repurchase at the price calculated in Part B instantaneously upon announcement of the recapitalization program. What will Markum's forecasted EPS be for the year 2020 after the announcement of the recapitalization program?

Forecasted 2020 EPS prior to the announcement of the recapitalization program (in $, rounded to two decimals): $_____________

 

Forecasted 2020 EPS after the announcement of the recapitalization program (in $, rounded to two decimals):$_____________

Answer rating: 100% (QA)

To calculate the forecasted 2020 EPS prior to the announcement of the recapitalization program we wi... View the full answer