Use the following information to complete the EPS/EBIT analysis for Gemini Company

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
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Use the following information to complete the EPS/EBIT analysis for Gemini Company.

Amount needed $3 million

Interest rate: 8% per annum

Tax rate   15 %  on profits. No tax on losses.

Stock price :  $5.00

Number of ordinary shares outstanding   200,000

Value of preference shares $100,000

Dividend rate on preference shares  : 20 %

 

           

 60% Debt Financing:40% Share Financing                        60% share financing: 40%  Debt

 

Recession

Normal

Boom

Recession

Normal

Boom

EBIT

(500,000)

300,000

600,000

(500,000)

300,000

600,000

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