Question: Create a Projected EPS/EBIT analysis Common Stock Financing Debt Financing Stock Recession Normal Boom Recession Normal Boom Recession Normal Boom EBIT $0 $0 $0 $0
Create a Projected EPS/EBIT analysis
|
| Common Stock Financing | Debt Financing | Stock | ||||||
|
| Recession | Normal | Boom | Recession | Normal | Boom | Recession | Normal | Boom |
| EBIT | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Interest | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EBT | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EAT | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| # Shares | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| EPS | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 | $0.00 |
Here are some entries you may want to consider:
EBIT Normal: $3,589 million (Assumption: from February 1, 2015 Income Statement)
EBIT Recession: $3,100 million (Assumption: earnings lower during recession)
EBIT Boom: $4,200 million (Assumption: earnings higher during boom)
Interest rate: 3.5% (Prime interest rate)
Tax rate: 38% (Assumption: Tax / EBIT both figures from February 1, 2015 Income Statement)
Percent Equity Used to Finance: 70% (Assumption: Beginning point of analysis; Any combination of equity/debt financing can be used)
Percent Debt Used to Finance: 30% (Assumption: Beginning point of analysis
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
