Question: Explain with the calculation in excel please! A firm has total assets of $10,000 and an EBIT of $1,000 each year. The stock price is

Explain with the calculation in excel please!

A firm has total assets of $10,000 and an EBIT of $1,000 each year. The stock price is $10 per share and the firms market value equals to its book value. Assuming no taxes.

Unlevered firm: If the firm is 100% equity financed, how many shares of stocks are outstanding? What are the Return on Equity (ROE) and Earnings Per Share (EPS) for the firm?

Levered firm: if the firm is 50% debt financed with an interest rate of 10%, how many shares of stocks are outstanding? What are the Return on Equity (ROE) and Earnings Per Share for the firm?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

PMAN650_Final_Exam_ Multiple choice 5 points each An integrated project management approach is one that: Develops new products with the use of multi-functional teams Exposes the front-loading of...

PMAN650_Final_Exam_ Multiple choice ?5 points each An ?integrated? project management approach is one that: Develops new products with the use of multi-functional teams Exposes the front-loading of...

CASE 1-5 Financial Statement Ratio Computation Refer to Campbell Soup Company's financial Campbell Soup statements in Appendix A. Required: Compute the following ratios for Year 11. Liquidity ratios:...

Boeing 2020 10-K Inline XBRL Viewer (sec.gov) Boeing 10-year financial summary and ratios via Morningstar Growth. Profitability, and Financial Ratios for Boeing Co (BA) from Morningstar.com (15 pts)...

Below are the Balance Sheet then the Income statement for Top Motor Corporation Instructions : Compute ratios for 2 years for your company. You are not responsible for the following: working capital,...

et hepfu Problems For Ryder Ltd for the financial year 1 January to 31 December 2009, record all necessary journal entries relating to the selected events described. Use generally accepted accounting...

first 3 questions of the last pic need answered. any help would be appreciated! *Update. problem 3d is the main concern! if you could concentrate your effort on this, that would be great! If New...

This question is based on the information provided in the abbreviated year-end Income Statement and abbreviated year-end Balance Sheet for NMC Corporation shown below. NMC Corporation Income...

Build a financial model on the following template. Assume that the WACC is 20%. Also assume the debt and equity remain the same. The FCF long-term growth rate is the same as the sales growth rate...

please solve it as soon as possible thanks. 10. Your company sold out the stocks (200.000 shares) of BCD A. in MKB (Market stock price for per share is 1,8 TL). The company paid 2.000 TL for the...

What are the reasons that warrants often sell above their intrinsic value?

Evaluate and comment on this statement: North American and European countries have created waste, pollution, and environmental devastation for decades, even centuries. Is it fair that countries like...

n the Characteristic Selectivity ( CS ) performance measure, a . portfolio performance is measured by comparing the returns of each stock in the portfolio to the return of a benchmark portfolio. b ....

fast please Q1: Code written using language A Line 1: x=3 Line 2: func1 {print "x"; } Line 3: func2({ Line 4: int x=9; Line 4: funci; Line 5: x=4.5) Line 4: func1 Line 5: func2 Line 6: funci Output:...

4-24. It is not our policy to exchange sale items, especially after they have been worn.

4-23. You claim that you mailed your cheque last Thursday but we have not received it.

4-15. To avoid damage to your credit rating, please remit - payment within 10 days.