Cross Town Cookies is an all-equity firm with a total market value of $700,000. The firm has 46,000 shares of stock outstanding. Management is considering issuing $149,000 of debt at an interest rate of 9 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $61,400. What is the EPS if the debt is issued? Ignore taxes.

Multiple Choice

$1.33

$.98

$1.19

$1.44

$1.53