Cox Inc., has total assets of $10,000,000 EBIT of $2,000,000and preferred divide
ID: 2661691 • Letter: C
Question
Cox Inc., has total assets of $10,000,000 EBIT of $2,000,000and preferred dividends of $200,000 and iss taxed at a rate of 40%.In an effort the number of shares of common stock for variouslevels of indebtedness, and the overall required return oninvestment: Capital structure debt ratio Cost ofdebt, kd No. of common stockshares Required return, ks 0% 0% 200,000 12% 15 8 170,000 13 30 9 140,000 14 45 12 110,000 16 60 15 80,000 20 Calculate earnings per share of each level ofindebtedness. Cox Inc., has total assets of $10,000,000 EBIT of $2,000,000and preferred dividends of $200,000 and iss taxed at a rate of 40%.In an effort the number of shares of common stock for variouslevels of indebtedness, and the overall required return oninvestment: Capital structure debt ratio Cost ofdebt, kd No. of common stockshares Required return, ks 0% 0% 200,000 12% 15 8 170,000 13 30 9 140,000 14 45 12 110,000 16 60 15 80,000 20 Calculate earnings per share of each level ofindebtedness.Explanation / Answer
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