Repeat parts (a) and (b) in Problem 1 assuming Beckett has a tax rate of 35 percent.
Question:
Repeat parts (a) and (b) in Problem 1 assuming Beckett has a tax rate of 35 percent.
In problem
a. Calculate earnings per share, EPS, under each of the three economic scenarios before any debt is issued. Also, calculate the percentage changes in EPS when the economy expands or enters a recession.
b. Repeat part (a) assuming that Beckett goes through with recapitalization. What do you observe?
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Related Book For 
Corporate Finance Core Principles and Applications
ISBN: 978-0077905200
3rd edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford
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