40 20000 net profits after taxes 900 5100 11100 eps

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Unformatted text preview: Debt Ratio 0.83 60% EBIT (Table 12.9) $ 0.00 Less: Interest (Table 12.11) $100.00 49.50 49.50 49.50 $ 50.50 $150.50 Net profits before taxes ($49.50) Less: Taxes (T ( 19.80)b 0.40) $200.00 20.20 60.20 Net profits after taxes ($29.70) $ 30.30 $ 90.30 EPS (10.00 shares, Table 12.10) ($ 2.97) $ 3.03 $ 9.03 Expected EPSa $ 3.03 Standard deviation of EPSa Coefficient of variation of a EPSa $ 4.24 1.40 The procedures used to calculate the expected value, standard deviation, and coefficient of variation were presented in Equations 5.2, 5.3, and 5.4, respectively, in Chapter 5. b It is assumed that the firm receives the tax benefit from its loss in the current period as a result of applying the tax loss carryback procedures specified in the tax law (see Chapter 1). 529 530 PART 4 Long-Term Financial Decisions TABLE 12.13 Expected EPS, Standard Deviation, and Coefficient of Variation for Alternative Capital Structures for Cooke Company Expected EPS (1) Standard deviation of EPS (2) Coefficient of variation of EPS...
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