Question 1: Compute the stock price for Cain if it sells at 18 times earnings per share and EBIT is 40,000
| Cain Auto |
|
|
|
Able Auto |
| debt |
50000 |
|
|
100000 |
| common stock share |
10000 |
|
|
5000 |
|
|
|
|
|
| Revenue |
10,000 |
|
|
10,000 |
| Interest = debt*10% |
-5000 |
|
|
-10,000 |
| Taxes= rev * 30% |
-3000 |
|
|
-3,000 |
| Net income |
2,000 |
|
|
-3,000 |
|
|
|
|
|
| EPS = net income / common |
0.2 |
|
|
-0.6 |
|
|
|
|
|
| Revenue |
15,000 |
|
|
15,000 |
| Interest = debt*10% |
-5000 |
|
|
-10,000 |
| Taxes= rev * 30% |
-4500 |
|
|
-4,500 |
| Net income |
5,500 |
|
|
500 |
|
|
|
|
|
| EPS = net income / common |
0.55 |
|
|
0.1 |
|
|
|
|
|
| Revenue |
50,000 |
|
|
50,000 |
| Interest = debt*10% |
-5000 |
|
|
-10,000 |
| Taxes= rev * 30% |
-15000 |
|
|
-15,000 |
| Net income |
30,000 |
|
|
25,000 |
|
|
|
|
|
| EPS = net income / common |
3 |
|
|
5 |
Question 2: Calloway cab company determines its break-even strickly on the basis of cash expenditures related to fixed cost. Its total fixed cost are 400,00, but 20% of this value is representented by depreciation. Its contribution margin(price minus variable cost) for each unit is 3.60. How many units does the firm need to sell to reach the cash break even point?