Question
A company can borrow funds at an after-tax cost of 4.5%. The companys stock price is $40 per share, its earnings per share are $2.00,
A company can borrow funds at an after-tax cost of 4.5%. The companys stock price is $40 per share, its earnings per share are $2.00, and the company has 15 million shares outstanding. If the company borrows an amount to repurchase 2 million shares of stock at the prevailing market price, that companys earnings per share is most likely to:
A. increase.
B decrease.
C. remain unchanged.
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Financial Markets And Institutions A Modern Perspective
Authors: Anthony Saunders, Marcia Millon Cornett, Marcia Cornett
2nd Edition
007294109X, 978-0072941098
