Question
AppleBanana, Inc. has no debt outstanding and a total market value of 5 million baht. EBIT are projected to be 1 million baht if the
AppleBanana, Inc. has no debt outstanding and a total market value of 5 million baht. EBIT are projected to be 1 million baht if the economic conditions are normal. If there is a strong expansion in the economy, then EBIT will be 10 percent higher. If there is a recession, then EBIT will be 10 percent lower. The company is considering a 2 million baht debt issue at an interest rate of 6 percent. The proceeds will be used to repurchase shares of stock. There are currently 100,000 shares outstanding. The company has a tax rate of 33 percent. What is the EPS under a strong expansion if the company goes through with recapitalisation? (Do not round intermediate calculations and round your answer to two decimal places, e.g., 32.16)
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