Problem:
Last year, Cayman Corporation had sales of $7,000,000, total variable costs of $3,000,000, and total fixed costs of $1,500,000. In addition, they paid $480,000 in interest to bondholders. Cayman has a 35% marginal tax rate.
Required:
Question: If Cayman's sales increase 7%, what should be the increase in earnings per share?
- 8.7%
- 13.9%
- 11.2%
- 10.8%
- 13.3%
Note: Show supporting computations in good form.