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Homework 2 X C Solved: At the end of January, X *Connect Homework 2 X C Dickinson Company Has $11,9 X F CA https:/ewconnect.mheducation.com/flow/connect.html Homework 2 Saved 16 Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here. 2 Lenow points Debt @ 101 Common stock, $10 par $200, 000 Debt @ 108 Total 400, 000 Common stock, $10 par $400, 000 Skipped Common shares $600, 000 Total 40, 000 Common shares $600, 000 20, 000 a. Complete the following table given earnings before interest and taxes of $24.000. $60,000, and $65,000. Assume the tax rate is 30 Book percent (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) Hint What is the relationship between EBIT S 24,000 $ Total Assets EBIT/TA % Lenow EPS Hall EPS 600,000 the EPS of the two firms ? Print 60,000 $ 600,000 $ 65,000 $ 600,000 b-1. What is the EBIT/TA rate when the firm's have equal EPS? EBIT/TA rate % b-2. What is the cost of debt? Cost of debt % b-3. State the relationship between earnings per share and the level of EBIT. EPS is unaffected by financial leverage when the pre-tax return on assets (EBIT/TA) the cost of debt. c. If the cost of debt went up to 12 percent and all other factors remained equal, what would be the break-even level for EBIT? Brook ovon laval Type here to search O e f W