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mlaursen
Jun 28, 2009, 12:49 PM
If Southland industries has $60,000 of 16% (annual interest) bonds outsanding, 1,500 shares of preferred stock paying an annual dividend of $ 5.00 per share and 4,000 shares of common stock outsanding. Assuming the firm has a 40% tax rate, compute the earnings per share (EPS) for the following levels of EBIT:

$24,600.00
$30,600.00
$35,000.00
rehmanvohra
Jun 30, 2009, 10:58 AM
ebit - interest - taxation - pref div = profit/# of shares

$24,600.00-9600-6000-7500=1500/4000=0.375
$30,600.00-9600-8400-7500=5100/4000=1.275
$35,000.00-9600-10160-7500=7740/4000=1.935