Question
Cross Town Cookies is an all-equity firm with a total market value of $730,000. The firm has 46,000 shares of stock outstanding. Management is considering
Cross Town Cookies is an all-equity firm with a total market value of $730,000. The firm has 46,000 shares of stock outstanding. Management is considering issuing $167,000 of debt at an interest rate of 7 percent and using the proceeds to repurchase shares. Before the debt issue, EBIT will be $65,000. What is the EPS if the debt is issued? Ignore taxes.
Multiple Choice
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$1.50
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$.99
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$1.74
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$1.63
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$1.30
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Focus On Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert J. Hughes, Melissa Hart
7th Edition
1265521972, 978-1265521974
