The ABC company has 100,000 shares outstanding and EPS =$4 (total earnings are $400,000). The stock price

Question:

The ABC company has 100,000 shares outstanding and EPS =$4 (total earnings are $400,000). The stock price is $80. The firm can issue

$6,000,000 of .08 debt. The corporate tax rate is .35. There are no investor taxes.

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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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The ABC company has 100,000 shares outstanding and EPS =$4 (total earnings are $400,000). The stock price

Question:

a. What is the projected stock price after issuance is substituted for stock? b. What is (1-t.)ki? EPS c. What is -k? P d. Any conclusions?

Step by Step Answer:

The Capital Structure Decision

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