Bondi Beachwear Pty Ltd has 50 000 shares outstanding.The company's EBIT for 2010 is $350 000 after charging depreciation of $25 000.Interest expense for the year is $75 000 and the company tax rate is 30%.What is the EPS for 2010?

Question

Quizplus · Accepted Answer

First, we need to calculate the earnings before taxes (EBT):

EBT = EBIT - interest expense
EBT = $350,000 - $75,000
EBT = $275,000

Next, we need to calculate the taxes:

Taxes = EBT x tax rate
Taxes = $275,000 x 0.30
Taxes = $82,500

Now we can calculate the net income:

Net income = EBT - Taxes
Net income = $275,000 - $82,500
Net income = $192,500

Finally, we can calculate the earnings per share (EPS):

EPS = Net income / number of shares
EPS = $192,500 / 50,000
EPS = $3.85

Therefore, the answer is B.

Bondi Beachwear Pty Ltd Has 50 000 Shares Outstanding