Suppose that in 2006, Global Conglomerate Corporation (from Chapter 2 in the text) launched an aggressive marketing campaign that boosts sales by 15%. However, their operating margin fell from 5.57% to 4.50%. Suppose that they have no other income, interest expenses are unchanged, and taxes are the same percentage of pretax income as in 2005 (See Table 2.2 in the text).
a. What is Global's EBIT in 2006?
b. What is Global's net income in 2006?
c. If Global's P/E ratio and number of shares outstanding remain unchanged, what is Global's share price in 2006?