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  • 400 Sales 0 Cogs 400 Ebdit Ebit Interest EBT Tax EAT/net Income/prfot After Tax

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    Ghoul Gaming
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    1) The company is proposing to reduce its number of shares from 8 to 4 and pay a dividend of $200 per year. 2) Under the current structure, the expected return on equity is 8.25% and expected earnings per share is $4.125. 3) Under the proposed structure, the expected return on equity increases to 9.9% and expected earnings per share increases to $4.95.

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    Book1.xlsx

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    1) The company is proposing to reduce its number of shares from 8 to 4 and pay a dividend of $200 per year. 2) Under the current structure, the expected return on equity is 8.25% and expected earnings per share is $4.125. 3) Under the proposed structure, the expected return on equity increases to 9.9% and expected earnings per share increases to $4.95.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    8 views3 pages

    400 Sales 0 Cogs 400 Ebdit Ebit Interest EBT Tax EAT/net Income/prfot After Tax

    Uploaded by

    Ghoul Gaming
    1) The company is proposing to reduce its number of shares from 8 to 4 and pay a dividend of $200 per year. 2) Under the current structure, the expected return on equity is 8.25% and expected earnings per share is $4.125. 3) Under the proposed structure, the expected return on equity increases to 9.9% and expected earnings per share increases to $4.95.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 3

    400 Sales

    0 COGS
    400 EBDIT
    EBIT
    interest
    EBT
    tax
    EAT/net income/Prfot after tax

    dividend RE
    current proposed
    d 0 d 200
    E 400 E 200
    No of shar 8 No of shar 4
    i 10% i 10%
    tax rate 34% tax rate 34%

    Bad Normal Good Bad Normal


    EBIT 25 50 75 EBIT 25 50
    interest 0 0 0 interest 20 20
    EBT 25 50 75 EBT 5 30
    tax 8.5 17 25.5 tax 1.7 10.2
    EAT/net in 16.5 33 49.5 EAT/net in 3.3 19.8

    roe 4.125% 0.0825 0.12375 roe 1.650% 9.900%


    eps 2.0625 4.125 6.1875 eps 0.825 4.95

    E(Roe) 8.250% E(Roe) 9.900%


    e)eps) 4.125 e)eps) 4.95

    sd-roe 4.125% sd-roe 8.250%


    sd-eps 2.0625 sd-eps 4.125
    Good
    75
    20
    55
    18.7
    36.3

    18.150%
    9.075

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