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Litho-Print is considering two possible capital structures, A and B, shown in the following table. Assume a 40% tax rate. Source of Capital Long-term debt Structure A $75,000 at 16% coupon | $50,000 at 15% coupon Structure B rate rate $15,000 with an 18% annual dividend 10,000 Preferred stock $10,000 with an 18% annual dividend Common stock a. Calculate two EBIT-EPS coordinators for each of the structures for EBIT values of $30,000 8,000 shares and $50,000 with their associated EPS values.

Litho-Print is considering two possible capital structures, A and B, shown in the following table. Assume a 40% tax rate. Source of Capital Long-term debt Structure A $75,000 at 16% coupon | $50,000 at 15% coupon Structure B rate rate $15,000 with an 18% annual dividend 10,000 Preferred stock $10,000 with an 18% annual dividend Common stock a. Calculate two EBIT-EPS coordinators for each of the structures for EBIT values of $30,000 8,000 shares and $50,000 with their associated EPS values.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Litho-Print is considering two possible capital structures, A and B, shown in the following table. Assume a 40% tax rate. Source of Capital Long-term debt Structure A $75,000 at 16% coupon | $50,000 at 15% coupon Structure B rate rate $15,000 with an 18% annual dividend 10,000 Preferred stock $10,000 with an 18% annual dividend Common stock a. Calculate two EBIT-EPS coordinators for each of the structures for EBIT values of $30,000 8,000 shares and $50,000 with their associated EPS values.
Transcribed Image Text:Litho-Print is considering two possible capital structures, A and B, shown in the following table. Assume a 40% tax rate. Source of Capital Long-term debt Structure A $75,000 at 16% coupon | $50,000 at 15% coupon Structure B rate rate $15,000 with an 18% annual dividend 10,000 Preferred stock $10,000 with an 18% annual dividend Common stock a. Calculate two EBIT-EPS coordinators for each of the structures for EBIT values of $30,000 8,000 shares and $50,000 with their associated EPS values.
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