SCENARIO #4: 10 points Complete the EPS/EBIT Analysis for the XYZ Company by det

Question

SCENARIO #4: 10 points Complete the EPS/EBIT Analysis for the XYZ Company by determining the EPS based on the following a.100% Debt financing bo 100% Stock financing c. 50/50 Debt Stock Combination Input Data Amount of capital needed EBIT Interest Rate Tax Rate Stock Price #Shares outstanding The Number S75 million 15 million ent 35 percent S50 250 million 100% Debt 100% Stock 50/50 Debt Stk Combo SEBIT SINTEREST SEBT STAXES SEAT #SHARES SEPS QUESTION-scenario #4: 1. Which financing is BEST for the XYZ Company? Explain

Explanation / Answer

$EPS= $EAT/#Shares

100% Stock financing is BEST for XYZ Company beause EPS is maximum in this case.

100%Debt 100%Stock 50/50Debt/Stock Combo $EBIT 15million 15million 15million $INTEREST 4.5million ---- 2.25million $EBT 10.5million 15million 12.75million $TAXES 3.675million 5.25million 4.463million $EAT 6.825million 9.75million 8.287million #SHARES 5million 6.5million 5.75million $EPS 1.365 1.5 1.441

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.