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Ornaments, Incorporated, is an all-equity firm with a total market value of $553,000 and 21,800 shares of stock outstanding. Management believes the earnings before interest and taxes (EBIT) will be $78,100 if the economy is normal. If there is a recession, EBIT will be 25 percent lower, and if there is a boom, EBIT will be 35 percent higher. The tax rate is 24 percent. What is the EPS in a recession? Multiple Choice

Ornaments, Incorporated, is an all-equity firm with a total market value of $553,000 and 21,800 shares of stock outstanding. Management believes the earnings before interest and taxes (EBIT) will be $78,100 if the economy is normal. If there is a recession, EBIT will be 25 percent lower, and if there is a boom, EBIT will be 35 percent higher. The tax rate is 24 percent. What is the EPS in a recession? Multiple Choice

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Ornaments, Incorporated, is an all-equity firm with a total market value of $553,000 and 21,800 shares of stock outstanding. Management believes the earnings before interest and taxes (EBIT) will be $78,100 if the economy is normal. If there is a recession, EBIT will be 25 percent lower, and if there is a boom, EBIT will be 35 percent higher. The tax rate is 24 percent. What is the EPS in a recession? Multiple Choice O $2.69 $2.04 $2.15
Transcribed Image Text:Ornaments, Incorporated, is an all-equity firm with a total market value of $553,000 and 21,800 shares of stock outstanding. Management believes the earnings before interest and taxes (EBIT) will be $78,100 if the economy is normal. If there is a recession, EBIT will be 25 percent lower, and if there is a boom, EBIT will be 35 percent higher. The tax rate is 24 percent. What is the EPS in a recession? Multiple Choice O $2.69 $2.04 $2.15
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