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BLR is a levered firm with assets valued at $1,000, has $500 of debt issued at 10% interest, and 100 shares of stock outstanding. Suppose
BLR is a levered firm with assets valued at $1,000, has $500 of debt issued at 10% interest, and 100 shares of stock outstanding. Suppose that earnings before interest and tax (EBIT) is $100 and that corporate profits are subject to a tax rate of 30%. Which of the following comes closest to the EPS of BLR? A. The EPS of BLR = $0.00 B. The EPS of BLR = $0.35 C. The EPS of BLR = -$0.05 D. The EPS of BLR = $1.00 E. The EPS of BLR = $0.75
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