An all equity corporation with a market value of 375000$ has EBIT of $60000 and 5000 shares outstanding. Assume a corporate tax rate of 40%. If the firm borrows $140000 @6 percent interest to buy back some of its stock?

1. Compute the current net income and EPS (show the steps of computation )

2. Number of shares repurchased (show the steps of computation )

3. Compute the net income and EPS after capital structure change (show the steps of

computation )