Question: Date Wireless has the following assets: Current assets: Temporary $1, 130, 000 Permanent 1, 260, 000 Capital assets 7, 650, 000 Total assets $10, 040,

Date Wireless has the following assets: Current assets: Temporary $1, 130, 000 Permanent 1, 260, 000 Capital assets 7, 650, 000 Total assets $10, 040, 000 Its operating profit (EBIT) is expected to be $2.3 million. Its tax rate is 30 percent. Shares are valued at $20. Capital structure is either short-term financing at 5 percent or equity. There is no long-term debt (Round the final answers to 2 decimal places.) a. Calculate expected earnings per share (EPS) if the firm is perfectly hedged. EPS $ b. Calculate expected EPS if it has a capital structure of 30% debt. EPS $ c. Recalculate a and b if short-term rates go to 12 percent. EPS Hedged Capital structure
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
