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Company A is ALL-EQUITY and has an asset base of $ 290,000,000 - Equity is worth $37/share

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 Company A is ALL-EQUITY and has an asset base of $ 290,000,000

- Equity is worth $37/share

                           Recession          Average        inflation

  Probability          25%                       55%            20%

EBIT             $ 5,000,000     $ 10,000,000.      $ 17,000

Calculate the expected EPS assuming the following:

- Company A is planning to switch to a 20% debt capital structure

- The company would have to pay an 8% on debt

Expert Answer:

Answer rating: 100% (QA)

Step 1 Calculate Earnings Before Interest and Taxes EBIT for each scenario Recession Scenario EBIT R View the full answer


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Related Book For  answer-question
Intermediate Financial Management

Intermediate Financial Management

ISBN: 978-1111530266

11th edition

Authors: Eugene F. Brigham, Phillip R. Daves

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Posted Date: September 06, 2023 02:43:26
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