Debt and financial risk Tower Interiors has made the forecast of sales shown in the following table…. 1 answer below »


Debt and financial occasion Tower Interiors has made the foretaste of sales shown in the subjoined table. Also fond is the chance of each roll of sales.

Sales

Probability

$200,000

.20

300,000

.60

400,000

.20

The solid has unwandering careless costs of $75,000 and shifting careless costs correspondent to 70% of the sales roll. The community pays $12,000 in portion-out per bound. The tax reprimand is 40%.

a. Compute the hues precedently portion-out and taxes (EBIT) for each roll of sales.

b. Compute the hues per portion-out (EPS) for each roll of sales, the expected EPS, the banner discontinuance of the EPS, and the coefficient of diversity of EPS, showy that there are 10,000 portion-outs of contemptible accumulation unappropriated.

c. Tower has the occasion to diminish leverage to cipher and pay no portion-out. This conquer claim that the sum of portion-outs unappropriated be increased to 15,000. Repeat bisect b inferior this boldness.

d. Compare your findings in bisects b and c, and expatiate on the property of the decrease of debit to cipher on the solid’s financial occasion.