ACME, Inc. reported the following income statement for 2009: Sales $2,500,000 Va
ID: 2772210 • Letter: A
Question
ACME, Inc. reported the following income statement for 2009:
Sales
$2,500,000
Variable Costs
900,000
Fixed Operating Costs
700,000
EBIT
900,000
Interest Expense
200,000
EBT
700,000
Taxes (30%)
210,000
Net Income
$490,000
Earnings Per Share
$4.90
If ACME's sales next year increase by 20%, what will ACME's earnings per share be?
Select one:
a. $7.14
c. $5.76
d. $7.58
Sales
$2,500,000
Variable Costs
900,000
Fixed Operating Costs
700,000
EBIT
900,000
Interest Expense
200,000
EBT
700,000
Taxes (30%)
210,000
Net Income
$490,000
Earnings Per Share
$4.90
Explanation / Answer
Hence, correct option is (a) $7.14
Current year Next year Sales 2,500,000 3000000 Variable Costs 900,000 1080000 Fixed Operating Costs 700,000 700,000 EBIT 900,000 1,220,000 Interest Expense 200,000 200,000 EBT 700,000 1,020,000 Taxes (30%) 210,000 306000 Net Income 490,000 714,000 Earnings Per Share 4.9 7.14 No of shares 100000 100000Related Questions
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