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NEW QUESTION: 1
Copybold Corporation is a start-up firm considering two alternative capital structures--one is conservative and the other aggressive. The conservative capital structure calls for a D/A ratio = 0.25, while the aggressive strategy call for D/A = 0.75. Once the firm selects its target capital structure it envisions two possible scenarios for its operations: Feast or Famine. The Feast scenario has a 60 percent probability of occurring and forecast EBIT in this state is $60,000. The Famine state has a 40 percent chance of occurring and the EBIT is expected to be $20,000. Further, if the firm selects the conservative capital structure its cost of debt will be 10 percent, while with the aggressive capital structure its debtcost will be
12 percent. The firm will have $400,000 in total assets, it will face a 40 percent marginal tax rate, and the book value of equity per share under either scenario is $10.00 per share. What is the difference between the EPS forecasts for Feast and Famine under the conservative capital structure?
A. $0.80
B. $1.00
C. $0
D. $0.44
E. $2.20
Answer: A
Explanation:
Explanation/Reference:
Explanation:
Debt = 25% = $100,000; Equity = 75% = $300,000; Total assets = $400,000.
Feast Famine
Probability0.60.4
EBIT$60,000$20,000
Less: Interest10,00010,000
EBT$50,000$10,000
Less: Taxes20,0004,000
NI$30,000$6,000
# shares30,00030,000
EPS$1.00$0.20
Difference in EPS for conservative capital structure:
EPS(Feast) - EPS(Famine) = $1.00 - $0.20 = $0.80.
NEW QUESTION: 2
A company president is concerned about the impact of a natural disaster on the company. How should management identify areas to apply its resources and mitigate potential impacts?
A. Establish and keep an active risk register based on qualitative risk analysis and expected losses.
B. Establish and keep an active risk register that includes mitigation strategies and a cost-benefit analysis.
C. Have each development team post the highest risk development items on the information radiator.
D. Avoid risk by splitting development teams into two locations to ensure knowledge continuity.
Answer: B
NEW QUESTION: 3
What kind of servers you should place in DMZ?
A. NFP
B. WWW
C. DHCP
D. FTP
E. TACACS+
Answer: B,D
NEW QUESTION: 4
A new storage efficiency job is executed on a volume hosting only a thick-provisioned LUN. Although 45%
of the space was saved, no extra space was seen by the client.
In this scenario, which statement is correct?
A. The client sees only the logical space for the LUN.
B. The client needs to re-scan the volume to detect the changes.
C. The client needs to re-scan the volume to detect the changes.
D. There are volume Snapshot copies that were taken before the efficiency job.
E. The volume is thin provisioned.
Answer: D
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