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Consider a firm with an EBITDA of $ 1 6 , 2 0 0 , 0 0 0 and an EBIT of $ 1 2
Consider a firm with an EBITDA of $ and an EBIT of $ The firm finances its assets with $ debt costing percent all of which is tax deductible and shares of stock selling at $ per share. The firm is considering increasing its debt by $ using the proceeds to buy back shares of stock. The firms tax rate is percent. The change in capital structure will have no effect on the operations of the firm. Thus, EBIT will remain at $
Calculate the EPS before and after the change in capital structure and indicate changes in EPS. Round to decimial points
EPS before i calculated as which is correct
i calculated the EPS after as which is deemed incorrect
and the change in EPS was which is also deemed wrong im just confused of what im doing wrong?
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