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    mlaursen's Avatar
    mlaursen Posts: 10, Reputation: 1
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    #1

    Jun 28, 2009, 12:49 PM
    Compute earnings
    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's Avatar
    rehmanvohra Posts: 739, Reputation: 27
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    #2

    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
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