BUSINESS COLLEGE

For an all-equity firm: (a) as earnings before interest and taxes (EBIT) increase, the earnings per share (EPS) increases by the same percentage. (b) as EBIT increases, the EPS increases by a larger percentage. (c) as EBIT increases, the EPS decreases at the same rate. (d) as EBIT increases, the EPS decreases by a larger percentage. (e) as EBIT increases, the EPS might either increase or decrease

Answers

Answer 1
Answer:

Answer:

(a) as earnings before interest and taxes (EBIT) increase, the earnings per share (EPS) increases by the same percentage.

Explanation:

Since the firm has no debt and no preferred stocks, EBIT is just EBT (earnings before taxes). So any change in EBIT (or EBT) will change earnings per share in the same proportion.

For example:

EBIT = $200

outstanding shares = 100

taxes = 25%

EPS = ($200 x 75%) / 100 = $1.50 per share

if EBIT increases by 50%  to $300

EPS = ($300 x 75%) / 100 = $2.25 per share

EBIT increased by 50% and EPS also increased by 50%

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g Twins Jane and Hal each inherited $150,000 exactly ten years ago. Jane invested the entire amount in a brokerage account to fund her retirement. Her account has been earning 8% per year since she invested it, and she expects it to earn 5% per year for the next 20 years. Hal spent all of his inheritance and has not saved anything for retirement. Assume there are no taxes. a. How much is Jane expected to have in her account at retirement (20 years from now)? b. Due to sibling rivalry, Hal wants to have at least $100,000 more saved at retirement (20 years from now) than Jane is expected to have at that time. He plans to make an equal deposit each year in an account earning the same annual interest rate as Jane’s, i.e., 5%, with the first deposit occurring one year from today and the last occurring 20 years from today. How much must Hal deposit each year in order to achieve his goal?

Answers

Answer:

a) Jane currently has $150,000 x (1 + 8%)¹⁰ = $323,838.75 in her account

in 20 years, she will have $323,838.75 x (1 + 5%)²⁰ = $859,240.61

b) we can use the future value of an annuity formula to calculate Hal's annual contribution.

future value = annual contribution x annuity factor

annual contribution = future value / annuity factor

  • future value = $959,240.61
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Megan and Susan are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer. Megan takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Susan takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza.Megan's opportunity cost of making a pizza is ?
a. 2/3 gallon
b. 5/7 gallon
c. 1 1/2 gallons
d. 1 2/5 gallons
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a. 2/3 gallon
b. 5/7 gallon
c. 1 1/2 gallons
d. 1 2/5 gallons
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Answers

Answer:

  1. a. 2/3 gallon
  2. b. 5/7 gallon

Explanation:

1. Megan takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza.

If she makes a pizza therefore, that is 2 hours that could have been used to make a gallon of root beer. However, it takes 3 hours to make a complete gallon so in those 2 hours only;

= 2/3 gallons would have been made

2. Susan takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza.

Like Megan above, the 5 hours that would be used for Pizza would have gone towards making a gallon of beer. If it takes 7 hours to make a gallon then those 5 hours would have made;

= 5/7 gallons of root beer.

3. Absolute Advantage: Megan

The person with the absolute advantage is the person that can produce more goods with the same amount of costs. Megan can make more pizza in a smaller amount of time than Susan so she has Absolute advantage.

Comparative Advantage: Megan

The person with a Comparative advantage is the one that has the lowest opportunity cost when producing a good. Megan again has a lower opportunity cost with an opportunity cost of 2/3 gallons.

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Answers

Answer:

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Explanation:

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Answers

Answer:

1. expanded

2. effective workforce

Explanation:

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Answers

Answer:

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Explanation:

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Answers

Answer:

The correct answer is

D. ($260,000)

good luck ❤
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