castle inc has no debt outstanding 2023 Business Finance
2023 castle inc has no debt outstanding and a total market value of 140 000 earnings before interest and taxes EBIT are
castle inc has no debt outstanding and a total market value of $140,000 earnings before interest and taxes EBIT are projected to be $32,000 if economic conditions are normal if there is strong expansion in the economy then EBIT will be 12 percent higher if there is a recession then EBIT will be 30 percent lower the firm is considering a debt issue of $115,000 with an interest rate of 6 percent the proceeds will be used to repurchase shares of stock there are currently 7,000 shares outstanding the firm has a tax rate 35 percent assume the stock price remains constant
1a calculate earnings per share (EPS) under each of the three economic scenarios before any debt is issued
recession EPS
normal
expansion
b2 given the recapialization calculate the percentage changes in EPS when the economy expands or enters a recession
percentage changes in EPS
recession
expansion
2a calculate the percentage changes in EPS when the economy expands or enters a recession
percentage changes in EPS
recession
expansion
b1 calculating earnings per share (EPS) under each of the three economic scenarios assuming the company goes through with recapitalization
recession EPS
normal
expansion
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