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NEW QUESTION: 1
Howell Enterprises is forecasting EPS of $4.00 per share for next year. The firm has 10,000 shares outstanding, it pays 12 percent interest on its debt, and it faces a 40 percent marginal tax rate. Its estimated fixed costs are $80,000 while its variable costs are estimated at 40 percent of revenue. The firm's target capital structure is 40 percent equity and 60 percent debt and it has total assets of $400,000.
On what level of sales is Howell basing its EPS forecast?
A. $1,000,000
B. $105,280
C. $292,444
D. $480,400
E. $316,722
Answer: C
Explanation:
Explanation/Reference:
Explanation:
EPS = (Sales - Fixed costs- Variable costs - Interest)(1 - T)/Shares outstanding.
Step 1 Calculate interest expense
Debt = 0.60 x $400,000 = $240,000.
Interest = 0.12 x $240,000 = $28,800.
Step 2 Solve for Sales (S)
EPS = $4.00 = (S - 0.40S - $80,000 - $28,800) x (1 - 0.40)/10,000
= (0.60S - $108,800)(0.6)/10,000
$4.00 = (0.36S - $65,280)/10,000
$105,280 = 0.36S
Sales = $292,444.44.
Alternative method
EPS = (EBIT - Interest)(1 - T)/Shares outstanding.
Solve for EBIT
Net Income = EPS x Shares outstanding = $4.00 x 10,000 = $40,000.
EBT = NI/(1 - T) = $40,000/(0.6) = $66,667.
Interest (from above) = $28,800.
EBIT = EBT + Interest = $66,667 + $28,800 = $95,467.
S = 0.40S + $95,467 + $80,000
0.6S = $175,467
S = $175,467/0.6 = $292,445.

NEW QUESTION: 2
If the average (arithmetic mean) of 3, 6, 10, m and n is 9, then what is the average of m+ 4 and n-2?
A. 0
B. 1
C. 2
D. 3
E. 4
Answer: B
Explanation:
Explanation/Reference:
Explanation:

NEW QUESTION: 3
DRAG DROP
In which order, from MOST to LEAST impacted, does user awareness training reduce the occurrence of the events below?

Answer:
Explanation:

NEW QUESTION: 4
Refer to the exhibit.

A Symmetrix is configured with the two RDF Groups RDFG 1 and RDFG 2 as shown in the exhibit. The SRDF R1 devices used by Application 1 (App 1) and Application 2 (App 2) are in RDFG 1. The SRDF devices used by Application 3 are in RDFG 2.
What should be created to enable SRDF/A for applications 1 and 2?
A. One device group with all the devices in RDFG 1
B. Two device groups; one with the App 1 devices and another with the App 2 devices
C. Two files; one with the App 1 devices and another with the App 2 devices
D. One file with all the devices in RDFG 1 and RDFG 2
Answer: A