4: TOR most recently sold 100,000 units at $7.50 each; its variable operating costs are $3.00 per unit, and its fixed operating costs are $250,000. Annual interest charges total $80,000, and the firm has 8,000 shares of $5 (annual dividend) preferred stock outstanding. It currently has 20,000 shares of common stock outstanding. Assume that the firm is subject to a 40% tax rate. a. At what level of sales (in units) would the firm break even on operations (that is, EBIT $0)? b. Calculate the firm's earnings per share (EPS) in tabular form at (1) the current level of sales and (2) a 120,000-unit sales level. c. Using the current $750,000 level of sales as a base, calculate the firm's degree
4: TOR most recently sold 100,000 units at $7.50 each; its variable operating costs are $3.00 per unit, and its fixed operating costs are $250,000. Annual interest charges total $80,000, and the firm has 8,000 shares of $5 (annual dividend) preferred stock outstanding. It currently has 20,000 shares of common stock outstanding. Assume that the firm is subject to a 40% tax rate. a. At what level of sales (in units) would the firm break even on operations (that is, EBIT $0)? b. Calculate the firm's earnings per share (EPS) in tabular form at (1) the current level of sales and (2) a 120,000-unit sales level. c. Using the current $750,000 level of sales as a base, calculate the firm's degree
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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