Howell Enterprises Is Forecasting EPS of R4

question 62

Multiple Choice

Howell Enterprises is forecasting EPS of R4.00 per share for next year.The firm has 10,000 shares outstanding, it pays 12 percent interest on its debt, and it faces a 40 percent marginal tax rate.Its estimated fixed costs are R80,000 while its variable costs are estimated at 40 percent of revenue.The firm's target capital structure is 40 percent equity and 60 percent debt and it has total assets of r400,000.On what level of sales is Howell basing its EPS forecast?

• A) R1,000,000
• B) R480,400
• C) R316,722
• D) R292,445
• E) R105,280

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