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3- CD is an all equity firm that has 10,000 shares of stock outstanding at a market price of $20 a share. The firm's management
3- CD is an all equity firm that has 10,000 shares of stock outstanding at a market price of $20 a share. The firm's management has decided to issue $50,000 worth of debt and use the funds to repurchase shares of the outstanding stock. The interest rate on the debt will be 5 percent.
a. What are the earnings per share at the break-even level of earnings before interest and taxes? Ignore taxes.
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