Crowded Fund Capital is an all-equity firm with a total market value of $1,015,000 and 20,000 shares of stock outstanding. Management is considering issuing $300,000 of debt at an interest rate of 5.5 percent and using the proceeds on a stock repurchase. As an all-equity firm, management believes its earnings before interest and taxes (EBIT) will be $266,000 if the economy is normal, $110,000 if it is in a recession, and $387,000 if the economy booms. Ignore taxes. What will the EPS be if the economy falls into a recession and the firm maintains its all-equity status?

Multiple Choice

• $5.50

• $19.35

• $13.30

• $12.33

• $11.50