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Caterpillar Corporation is an unlevered firm with a total market value of $ 3 , 9 0 0 , 0 0 0 with 6 0

Caterpillar Corporation is an unlevered firm with a total market value of $3,900,000 with 60,000 shares of stock outstanding. The firm has expected EBIT of $220,000 if the economy is normal and $280,000 if the economy booms. The firm is considering a $975,000 bond issue with an attached interest rate of 6 percent. The bond proceeds will be used to repurchase shares. Ignore taxes. What will the earnings per share (EPS) be after the repurchase if the economy booms?
$4.65
$4.92
$5.31
$5.66
$5.98

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