A Firm Has a Current Capital Structure Consisting of $400,000

question 155

Multiple Choice

A firm has a current capital structure consisting of $400,000 of 12 percent annual interest debt and 50,000 shares of common stock. The firm's tax rate is 40 percent on ordinary income. If the EBIT is expected to be $200,000, the firm's earnings per share will be ________.

• A) $2.40
• B) $3.04
• C) $7.04
• D) $1.82

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Definitions:

Unconscious Thought

Thoughts and processes that occur without an individual's aware perception, influencing actions and feelings.

Conditioned Stimulus

An initially neutral stimulus that becomes associated with an unconditioned stimulus to elicit a conditioned response after repeated pairings.

Conditioned Response

a learned response to a previously neutral stimulus that has become associated with an unconditioned stimulus.

Noise

Unwanted or disturbing sound that interferes with or diminishes clarity of auditory signals.