eoc_chapter_13

# eoc_chapter_13 - Chapter 13 Problems 1-19 Input boxes in...

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Chapter 13 Problems 1-19 Input boxes in tan Output boxes in yellow Given data in blue Calculations in red Answers in green

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Chapter 13 Question 1 Input Area: Market value \$80,000 EBIT \$10,000 Debt issue \$40,000 Interest rate 5% Shares outstanding 4,000 Expansion-EBIT 20% Recession-EBIT 30% Output Area: No debt EBIT \$7,000 \$10,000 Interest \$- \$- NI \$7,000 \$10,000 EPS \$1.75 \$2.50 Change EPS% -30% 0% With debt Share price = \$20.00 Shares repurchased = 2,000.00 EBIT \$7,000 \$10,000 Interest \$2,000 ### \$2,000 ### NI \$5,000 \$8,000 EPS \$2.50 \$4.00 Change EPS% -37.50% 0.00%
\$12,000 \$- \$12,000 \$3.00 20% \$12,000 \$2,000 \$10,000 \$5.00 25.00%

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Chapter 13 Question 2 Input Area: Market value \$80,000 EBIT \$10,000 Debt issue \$40,000 Interest rate 5% Shares outstanding 4,000 Expansion-EBIT 20% Recession-EBIT 30% Tax rate 35% Output Area: No debt with taxes EBIT \$7,000 \$10,000 Interest \$- \$- Taxes \$2,450 \$3,500 NI \$4,550 \$6,500 EPS \$1.14 \$1.63 Change EPS% -30% 0% With debt and taxes Share price = \$20.00 Shares repurchased = 2,000.00 EBIT \$7,000 \$10,000 Interest \$2,000 ### \$2,000 ### Taxes \$1,750 \$2,800 NI \$3,250 \$5,200 EPS 1.63 \$2.60 Change EPS% -37.50% 0.00%
\$12,000 \$- \$4,200 \$7,800 \$1.95 -20% \$12,000 \$2,000 \$3,500 \$6,500 \$3.25 25.00%

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Chapter 13 Question 3 Input Area: No debt TE = MV = \$80,000 With debt TE = \$40,000 Output Area: a. ROE 0.0875 0.1250 Change ROE% -30.00% 0.00% b. ROE 0.1250 0.2000 Change ROE % -37.50% 0.00% c. No debt No debt, ROE 0.0569 0.0813 Change ROE % -30.00% 0.00% With debt With debt, ROE 0.0813 0.1300 Change ROE % -37.50% 0.00%
0.1500 20.00% 0.2500 25.00% 0.0975 20.00% 0.1625 25.00%

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Chapter 13 Question 4 Input Area: Plan I: Shares outstanding 600,000 Plan II: Shares outstanding 300,000 Debt outstanding \$10,000,000 Interest rate 10% a. EBIT \$1,500,000 b. EBIT \$11,000,000 Output Area: a. NI EPS Plan I \$1,500,000 \$2.50
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eoc_chapter_13 - Chapter 13 Problems 1-19 Input boxes in...

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