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Cross Town Cookies is an all-equity firm with a total market value of $685,000. The firm has 45,000 shares of stock outstanding. Management is considering
Cross Town Cookies is an all-equity firm with a total market value of $685,000. The firm has 45,000 shares of stock outstanding. Management is considering issuing $140,000 of debt at an interest rate of 7 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $58,600. What is the EPS if the debt is issued? Ignore taxes
a) $1.58
b) $1.36
c) $.98
d)$1.21
e)$1.48
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