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 Subject: accounting Category: Business and Money > Accounting Asked by: shemrob-ga List Price: \$25.00 Posted: 20 Jul 2005 09:59 PDT Expires: 19 Aug 2005 09:59 PDT Question ID: 545831
 ```mr gold is in the widget businesd. He currently sells 1 million widgets a year at \$5 each. His variable cost to produce the widgets is \$3 per unit, and he has \$1,500,000 in fixed cost. His sales-to-assets ratio is five times, and 40 percent of his assets are financed with 8 percnet debt, with the balance financed by common stock at \$10 per share. The tax rate is 40 percent. Compute earnings per share I HAVE TO HAVE THE ANSWER BEFORE 4:PM TODAY!!!!!!!```
 ```Shemrob ? Sales = \$5,000,000 Assets (at 5:1) = \$1,000,000 Bonds (40%) = \$400,000 Stock = \$600,000 = 60,000 shares Contribution margin (at \$2 per widget) = \$2,000,000 Fixed cost = \$1,500,000 EARNINGS BEFORE INTEREST + TAXES (EBIT) = \$500,000 Bond payments (8%) = \$32,000 Taxes = (\$500,000 - \$32,000) * 0.40 = \$187,200 NET INCOME = \$280,800 EARNINGS PER SHARE = \$280,800/60,000 shares = \$4.68 If any part of this step-by-step calculation is unclear, please request a clarification and I'll explain it in more detail. Best regards, Omnivorous-GA```
 shemrob-ga rated this answer: `Thank you please see next question--i need it before 5pm today`