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Consider two companies in a world with no taxes that are alike except in borrowing choices. Pacific Corp. has no debt financing, and Atlantic Corp.
Consider two companies in a world with no taxes that are alike except in borrowing choices. Pacific Corp. has no debt financing, and Atlantic Corp. uses debt financing. The EBIT for both companies is $1,200. Pacific Corp. has 400 shares outstanding and pays no interest. Atlantic Corp. has 275 shares outstanding and pays $100 in interest. What is the EPS for each company? A. Pacific Corp. has an EPS of $4.00 and Atlantic Corp. has an EPS of $3.00. B. Both companies have an EPS of $4.00. C. Both companies have an EPS of $3.00. OD. Pacific Corp. has an EPS of $3.00 and Atlantic Corp. has an EPS of $4.00
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