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Problem 5-16 Earnings per share and financial leverage (LO5-4) Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here Debt 10% Common stock, 510 par Total Common shares 5270,000 Debt 10% 40,000 stock, $10 par 3510,00 Total $340,000 170,00 5510,000 17.00 o. Complete the following table given earnings before interest and taxes of $21,000, 551,000 and $62.000. Assume the tax rate is 30 percent (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) What is the relationship between Total Assets Lenow EPS the EP3 of the two firms EBITITA Hall EPS 5 5 EBIT 21.000 51.000 5 12000 510.000 510.000 510.000 5 b-1. What is the EBITTA rate when the firm's have equal EPS? EBIT TA rate b-2. What is the cost of debt? Cost of debt b-3. State the relationship between earnings per share and the level of EBIT EPS is nattected by financial leverage when the pro-tax return on assets (EBITITA) the cost of debt ct the cost of debt went up to 12 percent and all other factors remained equat what would be the break even level for EBIT? Problem 5-16 Earnings per share and financial leverage (LO5-4) Lenow Drug Stores and Hall Pharmaceuticals are competitors in the discount drug chain store business. The separate capital structures for Lenow and Hall are presented here Debt 10% Common stock, 510 par Total Common shares 5270,000 Debt 10% 40,000 stock, $10 par 3510,00 Total $340,000 170,00 5510,000 17.00 o. Complete the following table given earnings before interest and taxes of $21,000, 551,000 and $62.000. Assume the tax rate is 30 percent (Negative amounts should be indicated by parentheses or a minus sign. Round your answers to 2 decimal places.) What is the relationship between Total Assets Lenow EPS the EP3 of the two firms EBITITA Hall EPS 5 5 EBIT 21.000 51.000 5 12000 510.000 510.000 510.000 5 b-1. What is the EBITTA rate when the firm's have equal EPS? EBIT TA rate b-2. What is the cost of debt? Cost of debt b-3. State the relationship between earnings per share and the level of EBIT EPS is nattected by financial leverage when the pro-tax return on assets (EBITITA) the cost of debt ct the cost of debt went up to 12 percent and all other factors remained equat what would be the break even level for EBIT

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