ABC Corporation Has a Capital Structure That Consists of $20

question 13

Multiple Choice

ABC Corporation has a capital structure that consists of $20 million in debt and $40 million in equity. The debt has a coupon rate of 10%, while the industry return on equity is 15%. ABC Corporation is unsure of the state of the economy in the next year. The tax rate facing the company is 40%.

-Refer to ABC Corporation.Given the information in the table,what is the expected earnings per share if the company has 1 million shares outstanding?

• A) $1.44
• B) $1.56
• C) $1.68
• D) $1.78

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Definitions:

Expected Behaviours

The conduct or actions that an organization anticipates from its employees, based on its values, policies, and culture.

Critical-Incident Technique

A method used in management and training to collect direct observations of human behavior to identify events that lead to success or failure.

Restaurant

A business establishment where meals or refreshments can be purchased.

Work-life Balance

A concept referring to the equilibrium between professional responsibilities and personal life, ensuring neither is neglected.