BF Ltd plans to raise a net amount of $300 m to finance new equipment and working capital early in the next financial year. The company is considering to issue bonds with coupon rate of 14% per annum (paid annually) and face value of $1,000. Currently, the company has 20 million shares outstanding. The company's tax rate is 30%.

The balance sheet and income statement of BF prior to financing are as follows:

The next years projected sales are $2,700 million and EBIT is projected to be 15% of sales

Assuming that the existing debt will remain outstanding, calculate the company's earnings per share (EPS) after issuing the new bonds

(Full working out)

Balance sheet $m $m Current assets 900 Accounts payable 300 Net fixed assets Other current 350 liabilities Total current 650 liabilities Long-term debt 300 (10%) Common shares 100 ($5) Retained earnings 300 450 Total assets 1,350 Total liabilities and equity 1,350 Income statement $m Sales 2,500 Cost of sales 2,000 EBIT 500 30 470 Interest EBT Tax (30%) Net income 141 329