Consider a firm with an EBIT of $$570,000.$ The firm finances its assets with $$1,200,000$ debt $($costing $6\mathrm{.}4$ percent and is all tax

deductible$)$ and $220,000$ shares of stock selling at $$10\mathrm{.}00$ per share. The firm is considering increasing its debt by $$900,000,$ using the

proceeds to buy back $95,000$ shares of stock. The firm's tax rate is $21$ percent. The change in capital structure will have no effect on

the operations of the firm. Thus, EBIT will remain at $$570,000.$

Calculate the change in the firm's EPS from this change in capital structure.

Note: Round your answers to $2$ decimal places.Consider a firm with an EBIT of $$570,000.$ The firm finances its assets with $$1,200,000$ debt $($costing $6\mathrm{.}4$ percent and is all tax

deductible$)$ and $220,000$ shares of stock selling at $$10\mathrm{.}00$ per share. The firm is considering increasing its debt by $$900,000,$ using the

proceeds to buy back $95,000$ shares of stock. The firm's tax rate is $21$ percent. The change in capital structure will have no effect on

the operations of the firm. Thus, EBIT will remain at $$570,000.$

Calculate the change in the firm's EPS from this change in capital structure.

Note: Round your answers to $2$ decimal places.

EPS before

EPS after

Difference