EBIT and Leverage. Kaelea. Inc., has no debt outstanding and a total market value of $70,000…. 1 answer below »


EBIT and Leverage. Kaelea. Inc., has no debit unappropriated and a aggregate negotiate treasure of $70,000. Rights anteriorly concern and taxes. EBIT. are contemplated to be 56.000 if economic conditions are regular. If there is secure expatiation in the husbanding, then EBIT succeed be 25 percent upper. If there is a recession, then EBIT succeed be 40 percent inferior. Kaelea is because a $35.000 debit children after a while a 6 percent concern blame. The pay succeed be used to liberate of store. There are currently 3,500 distributes unappropriated. Ignore taxes for this completion.

a, Weigh rights per distribute, EPS, below each of the three economic scenarios anteriorly any debit is childrend. Also, weigh the percentage changes in EPS when the husbanding expands or enters a recession.

b, Repeat part (a) assuming that Kaelea goes through after a while recapitalization, What  do you heed?