OVNI Ltd. Capital consists of : equity (1,500 common shares) for a total value of $1,500,000. On its B/S, liabilities are for the value of $600,000. Part of the liabilities

OVNI Ltd. Capital consists of : equity (1,500 common shares) for a total value of $1,500,000. On its B/S, liabilities are for the value of $600,000. Part of the liabilities are bonds issued for a face value of $350,000 consisting of 1,000 bonds issued. The yearly coupon is 10%. Shareholders are expected to receive an annual dividend of 5% per year. The company is operating under normal conditions with a yearly income (EBIT) of $ 100,000. Calculate the WACC for OVNI? Disregard corporate Tax. How can capital structure of the company influences its risk profile, if cash flows for one year are set to $ 100,000 according to profit & loss account? is the value of the total balance sheet? Calculate the EPS (earning per share) under recession of 10%?

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