Hello, all of these answers are correct, however. I cannot seem to get recession

Q: Hello, all of these answers are correct, however. I cannot seem to get recession

Answer : EPS in the Recession is $ 0.74 Working notes for the above answer is as under EPS in the recession is $ 0.74 Recession EBIT 5829 Less: Interest on debt (42,900)*5% 2145 EAIBT 3684 Less: Tax 1252.56 EAT 2431.44 Devided By no of Shares 3270 EPS 0.74355963

ID: 2480769 • Letter: H

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Hello, all of these answers are correct, however. I cannot seem to get recession for recapitalization. I am getting 0.72 but this is incorrect! Please help, thank you.

Kaelea, Inc., has no debt outstanding and a total market value of $129,000. Earnings before interest and taxes, EBIT, are projected to be $8,700 if economic conditions are normal. If there is strong expansion in the economy, then lower. Kaelea is considering a $42,900 debt issue with an interest rate of 5 percent. The proceeds will be used to repurchase shares of stock. There are currently 4,300 shares outstanding. Assume Kaelea has a tax rate of 34 percent. EBIT will be 22 percent higher. If there is a recession then EBIT will be 33 percent Requirement 1 (a) Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) EPS Recession Normal Expansion 89 $1.34 $1.63 (b) Calculate the percentage changes in EPS when the economy expands or enters a recession. (Do not round intermediate calculations. Negative amounts should be indicated by a minus sign.) -33.00 % 22.00 % Recession Expansion Requirement 2: Assume Kaelea goes through with recapitalization (a) Calculate earnings per share, EPS, under each of the three economic scenarios after the recapitalization. (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).) EPS Recession Normal Expansion $1.51 $1.95

Explanation / Answer

Answer : EPS in the Recession is $ 0.74

Working notes for the above answer is as under

EPS in the recession is $ 0.74

Recession EBIT 5829 Less: Interest on debt
(42,900)*5% 2145 EAIBT 3684 Less: Tax 1252.56 EAT 2431.44 Devided By no of Shares 3270 EPS 0.74355963

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Hello, all of these answers are correct, however. I cannot seem to get recession

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