problem1. How come the EPS for Pet Smart is reported on one website as a overall number like $2.97 while the same information for EPS on other financial websites says its .71? How come there is a differentiation and how do they arrive at such different numbers when EPS=Net income/outstanding shares?
problem2. Hamada equation Cyclone Software Co. is striving to establish its optimal capital structure. Its current capital structure comprises 40% debt and 60% equity; but, the CEO thinks the firm must use more debt. The risk-free rate, rRF, is 3%; the market risk premium, RPM, is 5%; and the firm's tax rate is 40%. At present, Cyclone's cost of equity is 12%, which is determined by the CAPM. What would be the Cyclone's estimated cost of equity when it changed its capital structure to 50% debt and 50% equity?
problem3. After tax salvage value Kennedy Air Services is now in final year of the project. The equipment originally cost $21 million, of which 90% has been depreciated. Kennedy can sell the employed equipment today for $5.25 million, and its tax rate is 30%.
What is equipment's after-tax salvage value?