Homework Questions? Ask a Tutor for Answers ASAP
Please advise your deadline
The deadline is feb. 14th 2012,
This is the table for question 2
It did not show properly in the questions I sent.
But I am helping someone with a timed assignment now, so please check tomorrow, if I need anything, I will tell you
Thanks a million
You are welcome :)
Please do not respond to this message as this would lock me out of replyingto other posts .
Thank you for understanding :)
Sorry I did not get back to you earlier, but Please double check Case 1, the tax rate is not provided and that is a very important factor in the analysis. Please check with the instructor and advise me of his response
ok, I will check and get back to you.
Thank you :)
Sure. It is not due until the 14th and I have the excel sheet all filled out waiting for the tax rate only and it will be ready, so no problem :)
Great :) I will wait for your reply then :)
Am wondering if you could let me know about the formula where the tax rate is required. I may then be able to compare it with the textbook's method and explain this to the instructor as well :).
You do not need the formulaCustomer and the instructor does not need you to explain why do you need the tax rate, but in any case, in case 1 you need to calculate the EBIT indifference level, here is the formula:
Thanks for your prompt response. I looked in my textbook and it states that EPS( Earning Per Share) is calculated as follows:
EPS = NET INCOME / SHARES OUTSTANDING
Can you look at this formula and see if it corresponds to the one you stated?
I told you we need to calculate the EBIT indifference level not the EPS.
I did check it. You are right. I will try and get the tax rate from the instructor tomorrow. I think they might have forgotten to include it in the question.
It wasn't me alone that was wondering about the tax rate issue. Other students had the same issue.
Well, the instructor responded that he deliberately left out the tax rate to simplify the analysis. That is to say, 'we should imagine a world without taxes.' This means that we should not take the tax rate in consideration when doing the analysis.
I agree it sounds weird. What we can do is use the formula you wrote and then in place of 'tax rate' we put zero. so the (1-tax rate) in the formula will replaced by ( 1-0) and
then continue from there. This will make him realize that we used zero tax rate as he suggested.
Yes :) That is correct :)
I am done :)
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I just got it. Would you mind for me to look at it for before I click accept?
They look great with nice graph as well.
I hope all goes well this time :)
Thanks a lot
Of course not :)
Please go ahead, do not click accept unless you are 100% convinced :)
I am accepting the answer in few minutes time. I hope I'll be able to get back to you if there is something that I need a further explanation on the answers.
Is that ok?
I noticed a slight error in the graph of case one. I see that in calculating the EPS for plan 2, you found the EPS for when EBIT is $4000 000 to be 28 and also EPS to be 28 fro EBIT 5000 000) . When I worked it out the EPS should be 38 when EBIT is 5000 000) could you please confirm this urgently? I chaged it in the graph and I had a straight line graph. Please confirm.
Hi, Please check this chat you sent, I think there is either a slight error or a typing error.
the EPS should be 38, when EBIT is $5 000 000
EPS = (5000000- 1 200 000) / 100 000 = 38 and not 28 as written.
Am I correct?
I will appreciate it if you could confirm this right now.