If (1-teki < EPS/P the firm should issue debt and repurchase stock to increase EPS. Assume tc=

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If (1-teki < EPS/P the firm should issue debt and repurchase stock to increase EPS.

Assume tc= .35, kj = .10, EPS =$10, P =$80, N = 1,000,000 shares.

a. Should the fmn issue debt $20,000,000 of .1O? Base your conclusion on EPS. The $20,000,000 can buy 250,000 shares

(at a price of$80).

b. What is the EPS after the debt issuance?

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The Capital Structure Decision

ISBN: 9781402072994

1st Edition

Authors: Harold Bierman

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Question Posted: Jun 10, 2024 02:04 AM

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If (1-teki < EPS/P the firm should issue debt and repurchase stock to increase EPS. Assume tc=

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The Capital Structure Decision

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