subject
Business, 29.11.2019 01:31 yasyyas646646

Donat corp. is a small company looking at two possible capital structures. currently, the firm is an allminusequity firm with $600,000 in assets and 100,000 shares outstanding. the market value of each share is $6.00. the ceo of donat is thinking of leveraging the firm by selling $300,000 of debt financing and retiring 50,000 shares, leaving 50,000 shares outstanding. the cost of debt is 5% annually, and the current corporate tax rate for donat is 30%. the ceo believes that donat will earn $50,000 per year before interest and taxes. which of the statements below is true? a. 50/50 debtminustominusequity eps is $0.49. b. allminusequity eps is $0.35. c. shareholders will be better off by $0.14 per share under a firm with $300,000 in debt financing versus a firm that is allminusequity. d. statements a, b, and c are all true.

ansver
Answers: 1

Other questions on the subject: Business

image
Business, 22.06.2019 05:00, grangian06
Personal financial planning is the process of creating and achieving financial goals? true or false
Answers: 1
image
Business, 22.06.2019 07:20, staxeeyy767
Richardson hired j. c. flood company, a plumbing contractor, to correct a stoppage in the sewer line of her house. the plumbing company's 'snake' device, used to clear the line leading to the main sewer, became caught in the underground line. to release it, the company excavated a portion of the sewer line in richardson's backyard. in the process, the company discovered numerous leaks in a rusty, defective water pipe that ran parallel with the sewer line. to meet public regulations, the water pipe, of a type no longer approved for such service, had to be replaced either then or later, when the yard would have to be excavated again. the plumbing company proceeded to repair the water pipe. though richardson inspected the company's work daily and did not express any objection to the extra work involved in replacing the water pipe, she refused to pay any part of the total bill after the company completed the entire operation. j. c. flood company then sued richardson for the costs of labor and material it had furnished. (c) for what, if anything, should richardson be liable? explain."
Answers: 1
image
Business, 22.06.2019 11:40, berlyntyler
Select the correct answer brian wants to add a chart to his dtp project. what is the best way he can do this? a draw the chart using the dtp program draw option b create the chart in a spreadsheet then import it c. use the dtp chart wizard to create the chart within the dtp d. create an image of the chart in an image editor then import the image e use html code to create a chart within the dtp program
Answers: 3
image
Business, 22.06.2019 13:30, Hcalhoun21
How does hipaa address employee’s access to e-phi?
Answers: 1
You know the right answer?
Donat corp. is a small company looking at two possible capital structures. currently, the firm is an...

Questions in other subjects:

Konu
Advanced Placement (AP), 02.12.2021 22:10