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Michaels Ltd expects earnings before interest and taxes to be $40 000 for this period. Assuming an ordinary tax rate of 30%, calculate the firm’s earnings after taxes and earnings available for ordinary shareholders (earnings after taxes and preference share dividends, if any) under the following conditions: a The firm pays $10 000 in interest. b The firm pays $10 000 in preference share dividends.

expects to be $40,000

tax rate 30%—>calculate firm’s EPS & EPA (earnings after taxes and preference share dividends)

scenario 1: the firm pays 10,000 in interest

scenario 2: the firm pays 10,000 in preference share dividends

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91768817

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