Question: Question 1 QUESTIONS AND PROBLEMS 1. EBIT and Leverage [LO1] Maynard, Inc., has no debt outstanding and a total BASIC market value of $250.000. Earnings

Question 1

Question 1 QUESTIONS AND PROBLEMS 1. EBIT and Leverage [LO1] Maynard, Inc.,

QUESTIONS AND PROBLEMS 1. EBIT and Leverage [LO1] Maynard, Inc., has no debt outstanding and a total BASIC market value of $250.000. Earnings before interest and taxes. EBIT, are (Questions 1-15) projected to be $28,000 if economic conditions are normal. If there is strong expansion in the economy, then EBIT will be 30 percent higher. If there is a recession, then EBIT will be 50 percent lower. Maynard is considering a $90.000 debt issue with a 7 percent interest rate. The proceeds will be used to repurchase shares of stock. There are currently 5,000 shares outstanding. Ignore taxes for this

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