The following information pertains to the Classic Burger Restaurant chain: Sales $600,000 Variable costs 300,000 Fixed costs 100,000 EBIT 200,000 Interest expense 50,000 Earnings before taxes 150,000 Taxes (30%) 45,000 Net income $105,000 a. If sales increase by 10%, what will be the new level of EPS if the firm has 100,000 shares outstanding? b. What is the percentage increase in EPS? Explain the difference between the percentage increase in sales and the percentage increase in EPS. (*You must show your calculation process as well.)

The following information pertains to the Classic Burger Restaurant chain: Sales $600,000 Variable costs 300,000 Fixed costs 100,000 EBIT 200,000 Interest expense 50,000 Earnings before taxes 150,000 Taxes (30%) 45,000 Net income $105,000 a. If sales increase by 10%, what will be the new level of EPS if the firm has 100,000 shares outstanding? b. What is the percentage increase in EPS? Explain the difference between the percentage increase in sales and the percentage increase in EPS. (*You must show your calculation process as well.)

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

Problem 1PS

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Assume the following information pertains to Zigler Corporation: Sales $1,000,000 Total Variable Costs (40% of sales) 400,000 Fixed Costs EBIT Interest Expense EBT Taxes (21%) EAT #shares outstanding EPS 300,000 300,000 100,000 200,000 42,000 158,000 100,000 $1.58 Determine EPS if sales increase to $1,200,000. Then determine the DOL, the DFL, and the DCL.
You are considering a new supplier that you estimate would reduce your costs 0.025, increasing overall EBIT margin the same amount, or 250 basis points. Tax burden 0.79 Interest burden 0.8 Operating margin Asset turnover 2.1 Leverage ratio 1.2 Equity 56 Before the changes are made the firm was intrinsically valued at 45.54 After the changes, what would the new value be assuming the new ROE, growth, and EPS1. The firm pays dividends as 0.61 of EPS. The discount rate is 0.15" O 64.88 O 70.24 62.35 O 67.36 0.08 O 73.13
The financial manager for "ERR" industrial Company would extend the credit terms from "net 30" to "net 45" in order to stimulate credit sales. 'ERR' Company also benefits from relaxing of terms from its suppliers from "net 30" to "net 35". The manager is wondering how to estimate the financial impact of these alternatives would have on the shareholder's wealth. The financial manager estimates that the daily sales increase at a growth rate equals 10% following the extension of DSO. You gathered the following information:Purchase amount = 40% of sales amount Annual sales amount = $31,025,000 The annual cost of capital = 10% Inventory turnover =18.25 1- Calculate the daily NPV of the current terms. 2- Calculate the daily NPV of the proposed terms. 3- Based on your own calculations, what is your recommendation? Why? 4- Calculate the NPVCCP of the present terms. Interpret. 5- Calculate the ANPVCCP-aggregate of the Company. Interpret.
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You've collected the following information about Caccamisse, Incorporated: Sales $ 155,000 $12,200 Net income Dividends $ 8,100 Total debt $ 62,000 Total equity $53,000 a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What growth rate could be supported with no outside financing at all? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Sustainable growth rate b. Additional borrowing c. Internal growth rate % %
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9
Do not use Excel or Matrix You have to show your work 6. Sun Co., an electronics product manufacturer, is expecting to pay a dividend of $2 per share this year (end of the year, at t = 1). Based on market research for its products and production costs, Sun expects the dividend to grow at the rate of 15% per year in years two and three. Subsequently, the growth will be closer to the industry average, which is 4%. Sun’s cost of equity is 13%, what must be the a. value of each share three years from now, after the dividend for the third year is paid? b. value of each share now?
Cut off at the bottom is "Expansion percentage change in EPS". Thank you.
A firm has the following accounts and financial data for 2020: Sales = 30000 Cost of goods sold = 3000 Accounts payable = 500 Accounts receivables = 100 Number of shares of Common stocks = 1000 Preferred stock dividends = 95 operating expenses = 700 Interest expense=200 Tax rate = 25% Current liability = 1000 PRICE IS 7 What is the firm's earnings available to common shareholders for 2020? WHAT IS THE P/E RATIO? WHAT IS THE EPS

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