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    Khandker Motors Finances

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    Khandker Motors finances 40% of its total capital with debt. The cost of debt is 11%. The firm is in the 37% tax bracket and earned an operating profit of $2.5 million dollars. If the Khandker's total capital amounts to $22 million and its book value per share is $20, what is the firm's earnings per share?


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    Solution Preview

    Total capital = 22 million
    Equity capital = (1-40%)*22 million = 13.2 million
    Debt capital = 0.4*22=8.8 ...

    Solution Summary

    The solution calculates Khandker Motors' earnings per share.