Question
Assume the following facts about a company: Capital (000's) EBIT (000's) $1,000 Debt - Less Interest Expense - Equity $3,000 EBT $1,000 Total Capital $3,000
Assume the following facts about a company:
| Capital (000's) | EBIT (000's) | $1,000 | |
| Debt | - | Less Interest Expense | - |
| Equity | $3,000 | EBT | $1,000 |
| Total Capital | $3,000 | Taxes @ 40% | 400 |
| Shares @ $10 = 300 | Earnings after Tax | $ 600 |
What will be the company's new EPS if it borrows money at 10% interest and uses it to retire stock until capital is 40% debt? The stock can be purchased at its book value of $10 per share.
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Your Income Tax 2023
Authors: J.K. Lasser Institute
2023 Edition
1394157711, 978-1394157716
