2.Suppose that in 2010, Global launches an aggressive marketing campaign that boosts sales by 15%. However, their operating margin falls from 5.57% to 4.50. Suppose that they have no other income, interest expenses are unchanged, and taxes are the same percentage of pretax income as in 2009. a. what is Global’s EBIT in 2010?, b. What is Global’s income in 2010? c. If Global’s P/E ratio and number of shares outstanding remains unchanged, what is Global’s share price in 2010?
3.Suppose a firm’s tax rate is 35%.
A.What effect would a $10 million operating expense have on this year’s earnings? What effect would it have on next year’s earnings?
B.What effect would a $10 million capital expense have on this year’s earnings if the capital is depreciated at a rate of $2 million per year for five years? What effect would it have on next
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