Nonuns cos has a 20 percent tax rate and has 30160 million


NoNuns Cos. has a 20 percent tax rate and has $301.60 million in assets, currently financed entirely with equity. Equity is worth $30 per share, and book value of equity is equal to market value of equity. Also, let’s assume that the firm’s expected values for EBIT depend upon which state of the economy occurs this year, with the possible values of EBIT and their associated probabilities as shown below: State Recession Average Boom Probability of state 0.25 0.60 0.15 Expected EBIT in state $ 5,749,250 $ 11,498,500 $ 18,001,750 The firm is considering switching to a 25-percent-debt capital structure, and has determined that it would have to pay an 10 percent yield on perpetual debt in either event. What will be the standard deviation in EPS if NoNuns switches to the proposed capital structure? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Standard deviation in EPS %

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Nonuns cos has a 20 percent tax rate and has 30160 million
Reference No:- TGS01402994

Expected delivery within 24 Hours