EPS
Chapter14: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 2STP
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Question
Cross Town Cookies is an all-equity firm with a total market value of $780,000. The firm has 46,000 shares of stock outstanding. Management is considering issuing $197,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $71,000. What is the EPS if the debt is issued? Ignore taxes.
rev: 06_14_2019_QC_CS-170956
Multiple Choice
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$.98
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$1.32
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$1.55
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$1.68
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$1.79
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