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A firm issues 100,000 shares of common stock with a total market value of $3,800,000 and an equal amount of debt. The firm is expected
A firm issues 100,000 shares of common stock with a total market value of $3,800,000 and an equal amount of debt. The firm is expected to generate $1.5 million in operating income and pay $190,000 in interest. If the firm does not pay tax, what will happen to EPS if the firm repurchases $2,850,000 of shares and substitutes an equal amount of debt? Multiple Choice EPS decreases by 34.62% to $10.60. EPS stays at $13.10. EPS increases by 125.34% to $29.52. EPS increases by 225.34% to $42.62
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