P13–2 | ||||||

Breakeven comparisons: Algebraic Given the price and cost data shown in the accompanying | ||||||

table for each of the three firms, F, G, and H, answer the questions | ||||||

that follow. | ||||||

Firm F G H | ||||||

Sale price per unit $ 18.00 $ 21.00 $ 30.00 | ||||||

Variable operating cost per unit 6.75 13.50 12.00 | ||||||

Fixed operating cost 45,000 30,000 90,000 | ||||||

a. What is the operating breakeven point in units for each firm? | ||||||

P13–16 | ||||||||

Integrative: Leverage and risk Firm R has sales of 100,000 units at $2.00 per | ||||||||

unit, variable operating costs of $1.70 per unit, and fixed operating costs of | ||||||||

$6,000. Interest is $10,000 per year. Firm W has sales of 100,000 units at $2.50 | ||||||||

per unit, variable operating costs of $1.00 per unit, and fixed operating costs of | ||||||||

$62,500. Interest is $17,500 per year. Assume that both firms are in the 40% tax | ||||||||

bracket | ||||||||

a. Compute the degree of operating, financial, and total leverage for firm R. |

P13–22 | |||||

EBIT–EPS and capital structure Data-Check is considering two capital structures. | |||||

The key information is shown in the following table. Assume a 40% tax rate. | |||||

a. Calculate two EBIT–EPS coordinates for each of the structures by selecting any | |||||

two EBIT values and finding their associated EPS values |

P13–26 | ||||

Integrative: Optimal capital structure The board of directors of Morales Publishing, | ||||

Inc., has commissioned a capital structure study. The company has total assets of | ||||

$40,000,000. It has earnings before interest and taxes of $8,000,000 and is taxed at | ||||

a rate of 40%. | ||||

a. Create a spreadsheet like the one in Table 13.10 showing values of debt and equity | ||||

as well as the total number of shares, assuming a book value of $25 per | ||||

share. |

P13–2 | ||||||

Breakeven comparisons: Algebraic Given the price and cost data shown in the accompanying | ||||||

table for each of the three firms, F, G, and H, answer the questions | ||||||

that follow. | ||||||

Firm F G H | ||||||

Sale price per unit $ 18.00 $ 21.00 $ 30.00 | ||||||

Variable operating cost per unit 6.75 13.50 12.00 | ||||||

Fixed operating cost 45,000 30,000 90,000 | ||||||

a. What is the operating breakeven point in units for each firm? | ||||||

P13–16 | ||||||||

Integrative: Leverage and risk Firm R has sales of 100,000 units at $2.00 per | ||||||||

unit, variable operating costs of $1.70 per unit, and fixed operating costs of | ||||||||

$6,000. Interest is $10,000 per year. Firm W has sales of 100,000 units at $2.50 | ||||||||

per unit, variable operating costs of $1.00 per unit, and fixed operating costs of | ||||||||

$62,500. Interest is $17,500 per year. Assume that both firms are in the 40% tax | ||||||||

bracket | ||||||||

a. Compute the degree of operating, financial, and total leverage for firm R. |

P13–22 | |||||

EBIT–EPS and capital structure Data-Check is considering two capital structures. | |||||

The key information is shown in the following table. Assume a 40% tax rate. | |||||

a. Calculate two EBIT–EPS coordinates for each of the structures by selecting any | |||||

two EBIT values and finding their associated EPS values |

P13–26 | ||||

Integrative: Optimal capital structure The board of directors of Morales Publishing, | ||||

Inc., has commissioned a capital structure study. The company has total assets of | ||||

$40,000,000. It has earnings before interest and taxes of $8,000,000 and is taxed at | ||||

a rate of 40%. | ||||

a. Create a spreadsheet like the one in Table 13.10 showing values of debt and equity | ||||

as well as the total number of shares, assuming a book value of $25 per | ||||

share. |

P13–2 | ||||||

Breakeven comparisons: Algebraic Given the price and cost data shown in the accompanying | ||||||

table for each of the three firms, F, G, and H, answer the questions | ||||||

that follow. | ||||||

Firm F G H | ||||||

Sale price per unit $ 18.00 $ 21.00 $ 30.00 | ||||||

Variable operating cost per unit 6.75 13.50 12.00 | ||||||

Fixed operating cost 45,000 30,000 90,000 | ||||||

a. What is the operating breakeven point in units for each firm? | ||||||

P13–16 | ||||||||

Integrative: Leverage and risk Firm R has sales of 100,000 units at $2.00 per | ||||||||

unit, variable operating costs of $1.70 per unit, and fixed operating costs of | ||||||||

$6,000. Interest is $10,000 per year. Firm W has sales of 100,000 units at $2.50 | ||||||||

per unit, variable operating costs of $1.00 per unit, and fixed operating costs of | ||||||||

$62,500. Interest is $17,500 per year. Assume that both firms are in the 40% tax | ||||||||

bracket | ||||||||

a. Compute the degree of operating, financial, and total leverage for firm R. |

P13–22 | |||||

EBIT–EPS and capital structure Data-Check is considering two capital structures. | |||||

The key information is shown in the following table. Assume a 40% tax rate. | |||||

a. Calculate two EBIT–EPS coordinates for each of the structures by selecting any | |||||

two EBIT values and finding their associated EPS values |

P13–26 | ||||

Integrative: Optimal capital structure The board of directors of Morales Publishing, | ||||

Inc., has commissioned a capital structure study. The company has total assets of | ||||

$40,000,000. It has earnings before interest and taxes of $8,000,000 and is taxed at | ||||

a rate of 40%. | ||||

a. Create a spreadsheet like the one in Table 13.10 showing values of debt and equity | ||||

as well as the total number of shares, assuming a book value of $25 per | ||||

share. |

P13–2 | ||||||

Breakeven comparisons: Algebraic Given the price and cost data shown in the accompanying | ||||||

table for each of the three firms, F, G, and H, answer the questions | ||||||

that follow. | ||||||

Firm F G H | ||||||

Sale price per unit $ 18.00 $ 21.00 $ 30.00 | ||||||

Variable operating cost per unit 6.75 13.50 12.00 | ||||||

Fixed operating cost 45,000 30,000 90,000 | ||||||

a. What is the operating breakeven point in units for each firm? | ||||||

P13–16 | ||||||||

Integrative: Leverage and risk Firm R has sales of 100,000 units at $2.00 per | ||||||||

unit, variable operating costs of $1.70 per unit, and fixed operating costs of | ||||||||

$6,000. Interest is $10,000 per year. Firm W has sales of 100,000 units at $2.50 | ||||||||

per unit, variable operating costs of $1.00 per unit, and fixed operating costs of | ||||||||

$62,500. Interest is $17,500 per year. Assume that both firms are in the 40% tax | ||||||||

bracket | ||||||||

a. Compute the degree of operating, financial, and total leverage for firm R. |

P13–22 | |||||

EBIT–EPS and capital structure Data-Check is considering two capital structures. | |||||

The key information is shown in the following table. Assume a 40% tax rate. | |||||

a. Calculate two EBIT–EPS coordinates for each of the structures by selecting any | |||||

two EBIT values and finding their associated EPS values |

P13–26 | ||||

Integrative: Optimal capital structure The board of directors of Morales Publishing, | ||||

Inc., has commissioned a capital structure study. The company has total assets of | ||||

$40,000,000. It has earnings before interest and taxes of $8,000,000 and is taxed at | ||||

a rate of 40%. | ||||

a. Create a spreadsheet like the one in Table 13.10 showing values of debt and equity | ||||

as well as the total number of shares, assuming a book value of $25 per | ||||

share. |