EPS, Debt-to-Equity, Breakeven point LexMart maintains a debt-to-equity ratio of 1.0 regardless of whether the firm...
Fantastic news! We've Found the answer you've been seeking!
Question:
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/05/664819d79596b_239664819d74b262.jpg)
Transcribed Image Text:
EPS, Debt-to-Equity, Breakeven point LexMart maintains a debt-to-equity ratio of 1.0 regardless of whether the firm experiences expansion or contraction. At the present time, LexMart has $1,000 par value bonds outstanding that pay 11% annual interest. The firm also has 2.9 million shares of common stock outstanding that sells for $24 per share. a. Based on LexMart's current annual NOP of $23,500,000 and its corporate tax rate of 21%, what is its EPS? b. If LexMart would like to finance a $63 million expansion while maintaining it's current debt-to-equity ratio of 1.0, how many bonds at $1,000 per bond and shares of stock will it have to sell to pay for the expansion? c. After the expansion, what level of annual NOP will LexMart have to generate to maintain its current level of EPS? a. LexMart's current EPS is $ 4.316. (Round to three decimal places.) b. The number of bonds LexMart will have to sell to pay for the expansion is 31500 bonds. (Round the the nearest whole number.) The number of stock shares LexMart will have to sell to pay for the expansion is 1312500 shares. (Round the the nearest whole number.) c. After the expansion, the level of annual NOP LexMart will have to generate to maintain its current level of EPS is $23637760 (Round to the nearest whole number.) EPS, Debt-to-Equity, Breakeven point LexMart maintains a debt-to-equity ratio of 1.0 regardless of whether the firm experiences expansion or contraction. At the present time, LexMart has $1,000 par value bonds outstanding that pay 11% annual interest. The firm also has 2.9 million shares of common stock outstanding that sells for $24 per share. a. Based on LexMart's current annual NOP of $23,500,000 and its corporate tax rate of 21%, what is its EPS? b. If LexMart would like to finance a $63 million expansion while maintaining it's current debt-to-equity ratio of 1.0, how many bonds at $1,000 per bond and shares of stock will it have to sell to pay for the expansion? c. After the expansion, what level of annual NOP will LexMart have to generate to maintain its current level of EPS? a. LexMart's current EPS is $ 4.316. (Round to three decimal places.) b. The number of bonds LexMart will have to sell to pay for the expansion is 31500 bonds. (Round the the nearest whole number.) The number of stock shares LexMart will have to sell to pay for the expansion is 1312500 shares. (Round the the nearest whole number.) c. After the expansion, the level of annual NOP LexMart will have to generate to maintain its current level of EPS is $23637760 (Round to the nearest whole number.)
Expert Answer:
Posted Date:
Students also viewed these finance questions
-
Selected data on merchandise inventory, purchases, and sales for Jaffe Co. and Coronado Co. are as follows: Instructions 1. Determine the estimated cost of the merchandise inventory of Jaffe Co. on...
-
Consider the following inventory information and relationships for the F Beamer Corp. a) Orders can only be place in multiples of 100 units b) Annual unit usage is 300,000 (assume 50 week yr in...
-
Your financial planner offers you two different investment plans. Plan X is a $25,000 annual perpetuity. Plan Y is a 10-year, $51,000 annual annuity. Both plans will make their first payment one year...
-
Read the article No Accounting for Being Disorganized in the March 10, 2004, issue of BusinessWeek. (The books Website provides a free link.) Required 1. Why does Steven Cohen, the author of the...
-
The following cases are independent. Case A Timmis Limited bought a building for $ 2,120,000. Before using the building, the following expenditures were made: Repair and renovation of building $...
-
CAMPAD 5pt 4) What size moter would reducer is only you purchase if the 80% efficient? Choose the reduce best single reduction Wam gear from Document 49 all design decisions mater 17501pm PD = 10.4...
-
The current sections of Waterway Inc's balance sheets at December 31, 2021 and 2022, are presented here. Waterway's net income for 2022 was $150,300. Depreciation expense was $26,900. 2022 2021...
-
What strategies does an RTOS employ to address priority inversion? Can you describe a scenario where priority inversion could cause critical issues and how the RTOS mitigates it ?
-
What has changed about beef production in the United States between the 1960s/70s and today? Select 2-3 aspects of beef production and explain why things have changed.
-
Based on the current population's annual growth rates and total fertility rates you can now make some general projections as to the future population geography of the world.
-
1) A ball is thrown vertically upward with a speed of 15 miles per hour. How long is it in the air? Assume it comes back to the same location and air resistance is negligible. 2) A car traveling at...
-
With the broad-based fall in CTKs, the growth in ACTKs from the passenger segment of the industry led to a decline in cargo load factors to 46.2% in March, why would that happen?
-
De la nomenclatura IUPAC de From the IUPAC nomenclature of * PhCO2K * PhOCHO * Cl2CHCOCl * PhCH (CH3) COOCH3 * CH3CH (OH) CH2CN * (CH3) 2CHCOOCHO * CH3CONHCH2Ph * (CH3) 2CHCH2COBr
-
Activator rod AB exerts on crank BCD a force P directed along line AB. Knowing that P must have a 100-N component perpendicular to arm BC of the crank, determine (a) The magnitude of the force P, (b)...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App