Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented below. Cain Able Debt @ 10% Common stock $140, 000 280,e00 Debt e 10% Common stock $280, 000 140,000 Total $420,000 Total $420,000 Common shares 28,000 Common shares 14,000 a. Compute EPS If EBIT are $28,000, $42,000, and $59,000 (assume a 30 percent tax rate). (Round the final answers to 2 decimal places. Do not leave any empty spaces; input a o wherever it is required.) Cain Able EPS at $28,000 EPS at $42,000 EPS at $59,000 b. What is the relationship between EPS and level of EBIT? 1. Earnings before interest and taxes is less than cost of debt. (Click to select)

Cain Auto Supplies and Able Auto Parts are competitors in the aftermarket for auto supplies. The separate capital structures for Cain and Able are presented below. Cain Able Debt @ 10% Common stock $140, 000 280,e00 Debt e 10% Common stock $280, 000 140,000 Total $420,000 Total $420,000 Common shares 28,000 Common shares 14,000 a. Compute EPS If EBIT are $28,000, $42,000, and $59,000 (assume a 30 percent tax rate). (Round the final answers to 2 decimal places. Do not leave any empty spaces; input a o wherever it is required.) Cain Able EPS at $28,000 EPS at $42,000 EPS at $59,000 b. What is the relationship between EPS and level of EBIT? 1. Earnings before interest and taxes is less than cost of debt. (Click to select)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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