Refer to the scenario above. What level of EBIT would make this an attractive strategy?
A) $2,000
B) $1,800
C) $1,600
D) $1,400
Answer: B
Explanation: B) Set the two EPS's of SC Co., before and after debt, equal to each other and solve for EBIT. Thus,
all-equity EPS = EBIT/600 shares
leveraged EPS = (EBIT - $6000 × 10%)/400 shares
so EBIT/600 = (EBIT - $600)/400.
Solving, we get EBIT = $1,800.
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Culture is best described as a society's ________
A) attitude B) consciousness C) personality D) history
Surya has been through a training to become a visionary leader. He has learned to provide a vision and instill confidence in employees. Based on that training, what else should he do?
a. Create clear reporting structures. b. Motivate employees using rewards and punishment. c. Clearly define and assign tasks. d. Create an environment based on teamwork and cooperation.