Suppose that in 2016, Global launches an aggressive marketing campaign that boosts sales by 15%. However, their

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Suppose that in 2016, Global launches an aggressive marketing campaign that boosts sales by 15%. However, their operating margin falls from 5.57% to 4.50%. Suppose that they have no other income, interest expenses are unchanged, and taxes are the same percentage of pretax income as in 2015.

a. What is Global's EBIT in 2016?

b. What is Global's net income in 2016?

c. If Global's P/E ratio and number of shares outstanding remains unchanged, what is Global's share price in 2016?

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Corporate Finance

ISBN: 978-0134083278

4th edition

Authors: Jonathan Berk, Peter DeMarzo

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