A firm has no debt outstanding and a total market value of $938,080. Earnings before interest and taxes, EBIT, are projected to be $118, 600. The company is considering a $205,920 debt issue with an interest rate of 8.25%. The proceeds will be used to repurchase 7200 shares of stock. There are currently 32,800 shares outstanding. Ignore taxes for this problem. What is the EPS on the firm after the additional debt is taken on? A) 3.62 B) 4.56 C) 3.10 D) 3.97 E) 4.37

A firm has no debt outstanding and a total market value of $938,080. Earnings before interest and taxes, EBIT, are projected to be $118, 600. The company is considering a $205,920 debt issue with an interest rate of 8.25%. The proceeds will be used to repurchase 7200 shares of stock. There are currently 32,800 shares outstanding. Ignore taxes for this problem. What is the EPS on the firm after the additional debt is taken on? A) 3.62 B) 4.56 C) 3.10 D) 3.97 E) 4.37

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter18: Initial Public Offerings, Investment Banking, And Capital Formation

Section: Chapter Questions

Problem 2P

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