Multiple Choice
Consider two companies in a world with no taxes that are alike except in borrowing choices.District Corp.has no debt financing,and Energy Corp.uses debt financing.The EBIT for both companies is $3,500,000.District Corp.has 400,000 shares outstanding and pays no interest.Energy Corp.has 250,000 shares outstanding and pays $500,000 in interest.What is the EPS for each company?
A) Both companies have an EPS of $8.75.
B) Both companies have an EPS of $12.00.
C) District Corp.has an EPS of $12.00 and Energy Corp.has an EPS of $8.75.
D) District Corp.has an EPS of $8.75 and Energy Corp.has an EPS of $12.00.
Correct Answer:
Verified
Correct Answer:
Verified
Q9: If company earnings reflect a rate of
Q28: Leverage magnifies both gains and losses.
Q37: The federal government bond market is open
Q40: Which of the statements below is FALSE?<br>A)When
Q68: Proposition II from M&M says that the
Q88: The ability to add debt financing to
Q102: When earnings are less than the cost
Q118: Keystone Generation,Inc.has a project that costs $900,000.It
Q119: Which of the statements below is FALSE?<br>A)Two
Q120: Which of the statements below is FALSE?<br>A)External